The Law of Comparative Advantage

The Law of Comparative Advantage

There is a well- known law called ‘The Law of Comparative Advantage’, which basically demonstrates that all economies see an overall gain when they open their borders to free trade.

a) How have you, or your parents, benefitted from free trade (hint – think about all the products you can buy from overseas at the Walmart or the products that your company sells overseas).  How have you, your neighbor, or your community been harmed by free trade (think about factories closing down and moving overseas, or maybe this doesn’t impact you or your circle of peers).

b) Who, in America, has benefited from free trade and who has been hurt.

c) Do you care about the hundred million Chinese workers that were pulled out of poverty because of free trade with America, or do you wish we had never engaged in free trade with China and other countries which have lower wage rates than our wage rate. Also, do you think it is fair that we buy all of China’s goods but that they do not buy from us

Solution Preview

Notably, everyone benefits from free trade including my parents. Primarily, this is based on the fact that we can readily purchase imported products at relatively fair prices from local stores such as Walmart…

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