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Specialization and Trade - Crash Course Economics - 2
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Adam Grant was the person who created the wealth of nations. He concluded that specialization and trading are better for everyone involved.
If you don’t specialize and trade, you’ll have to do everything yourself.
For example in the case of pizza, you’ll have to farm wheat, they make an oven and then even cook.
Instead, by specializing everyone’s opportunity cost improves.
The PPF profit possibility frontier helps understand the relationship between producing two products,
For example, if the us is producing 500 planes and it could use the same effort to produce 2000 shoes, For every 1 plane they produce, they leave our 4 shoes.
If China can produce 100 planes or 800 shoes with the same effort, china for every 1 plane produced, leaves out 800 shoes.
It may seem that the US is better off here and should not trade, but if the US trades planes for shoes, they’ll be better off (need to learn here)
Point outside the PPF curve is an impossibility The point inside the PPF curve is inefficiency. How do you maximize efficiency? By specializing and trading.
Self-sufficiency is inefficiency
Wellness can be predicted by a variety of many economic predictors like GDP per capita, employee, and ent rate, by this we see statistically, most improvements came after Industrial Revolution.
We also see that countries that are voluntarily or involuntarily cut off from trading with other countries. like Iran Zimbabwe %
And countries like India and China that opened up the economy and started trading have been experiencing significant growth in %
Individuals and countries should specialize and do things that they have a competitive advantage in and then trade with others in what they have a competitive advantage in. This trade is mutually beneficial