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Reminders: New Room For Lecture: CEM 202 Due Date of Exercise 1 (Written Report and Oral Presentation)
Reminders: New Room For Lecture: CEM 202 Due Date of Exercise 1 (Written Report and Oral Presentation)
Autarky
exists whenever a country can survive of
continue its economic activities without
external assistance or international trade
exists when a country does not engage in
international trade
Additional Terms to Remember
Export
quantity or value goods and services that are
produced domestically and sold abroad
Import
quantity or value goods and services that are
produced abroad and sold domestically
Net Export or Net Trade
value of export less value of import
positive?
negative?
Why Do Nations Go Into Trade?
Assume the following scenario:
• Two good – two country model
• Two individuals James and Nadine,
representing two nations
• James is a skilled farmer, and Nadine
is a good weaver
• A condition of autarky / self-sufficiency /
absence of trade
Autarky / Self-sufficiency / absence
of trade
James (farmer) Nadine (weaver)
Food Clothing
no ↑ food no ↑ clothing
wastage production wastage production
of skill of skill
With trade
Food Clothing