نطق اول

Lecture 1:

Listen to part of a lecture in an economics class. The professor has been talking about international trade.

Professor: Okay, so let’s recap from yesterday. Why do nations engage in international trade? Well, it’s often because they have a surplus, more than they need. and they also trade for the opposite reason, when they have shortages and can’t produce everything they want or need domestically. So these explanations are good as far as they go, but there’s another scenario we need to discuss and that is: What if a country is capable of producing something it wants or needs but it can also import that same product from another country? Now, how does the country decide whether to make the product itself or import it?

Okay, take an example, think about the bananas that you buy in the supermarket, if you look closely you’ll see that most bananas in the United States are imported, imported from countries with tropical climates. But the United States has warm regions, it has green houses, clearly it would be possible to grow bananas here. So why doesn’t the U.S. do that? Scott?

Student: Well, it’s like a lot cheaper and more efficient for countries with tropical climates, for tropical countries to grow bananas isn’t? I mean they don’t need green houses to grow bananas and they’re not so limited to certain regions.

Professor: Okay, good. That’s exactly right. Tropical countries have what we call an “absolute advantage” in producing bananas. Absolute advantage is the term we use when a country can produce more of a product using fewer resources. They’re the most efficient producer of something, and the United States can’t beat that with bananas so it’s better off specializing in other goods that it can make more efficiently. Let’s take an example. Say we have two countries and say they each make two products and they trade only with each other. Simplistic I know, but, well, you’ll see where I’m going with this in a moment. Okay, so, as I was saying, two countries, two products. One country can produce both products more efficiently than the other country. Should these two countries even trade at all?

Student: Uh, well, no. I mean, like, what’s in it for the more efficient country?

Professor: Well, what is in it for them? Let’s, uh, well let’s call these countries X and Y. Country X makes both TVs and chairs more efficiently than country Y does. It has an absolute advantage in producing both commodities. No question.

But what economists also look at is relative efficiency and from that perspective we see that county X is a lot more efficient at making TVs than it is at making chairs and in country Y well it turns out they’re more efficient at making chairs than TVs. So we say that country Y has a comparative advantage at chair making and country X has a comparative advantage at TV making. So what should happen?

Well, first, both countries should specialize in the production of just one thing: the product they’re most efficient at making. Country X should make only TVs and country Y should make only chairs. Then the two of them should trade.

Specialization in trade are going to lead to increases in production, and increase overall supply of goods and generally lower prices. Right?

Student: Professor, I still don’t see how countries figure out when and where they have a comparative advantage.

Professor: Well, well, you can’t fully understand the concept of comparative advantage without also considering the related concept of “opportunity cost”.

Opportunity cost is what you lose, the options you have to give up in order to use your time and resources for something else.

Countries can determine where their comparative advantages lie, like making TVs instead of chairs by figuring out what they can make with the lowest opportunity cost. Maybe this will be clear if we apply it on a personal level. Now think about when you go out to a movie. Your direct monetary cost is the price of the movie ticket right? But you also spend two hours at the theatre.

Your opportunity cost includes both whatever else you could’ve spent your money on, ten candy bars maybe, and whatever else you could have accomplished during the time you were watching the movie. You might have completed your homework for this class or you might have worked two hours overtime at your job thereby earning instead of spending money. See these lost possibilities are your opportunity cost.

e found so far.