Chapter Objectives

After reading this chapter you should be able to

• Understand with whom we trade, in what goods we trade, and that international trade benefits both trade partners and why.

• Know the principles of absolute and comparative advantage and why they are important in proving the benefits from trade.

• See that there are reasons for limiting trade and know the mechanisms for doing so.

• Understand that limiting trade protects some industries and jobs, but at a very high cost.

• See that the use of trade as a diplomatic weapon has been largely a failure.