Chapter 3

The world is dependant on one another to provide goods such as clothing, electronics, and food. This helpful to establish and maintain relationships between countries and  improve economies. Trade is usually only done when it is beneficial to both parties but it is also unpredictable due to the fact that it is a result of human behavior. When one party has an advantage over the  other in terms of production cost and efficiency then this is known as absolute advantage. When trading however, if the agreement can reduced the opportunity cost of both parties then it is a beneficial trade. This kind of agreement allows countries to specialize in certain types of jobs. Even when a trade is beneficial for a country, it can still make individuals worse off due to an increase of goods they lack interest in and a decrease in the one's that they do want.