Why We Trade


In Syon Bhanot's section of Ec 10, students play a game to understand comparative advantage and the benefits of trade.

The instructor splits the students into two groups, each of which represents a different country. The groups receive information on what each "country" has the option to produce given its capacities. They are given "labor units" to assign to the production of chocolates and gum, which the instructor keeps in the front of the classroom for all students. Using the concepts from class, the students work together to determine units of production of chocolate and gum that they want. At the end of the activity, the class discusses how trade can make both countries better off even though one country is superior in its ability to turn labor units into each of the two outputs, showing the concept of comparative advantage. The goal of the activity is to demonstrate how trade has the ability to make everyone better off.

See below for a handout of this activity.

handout.pdf545 KB