Unit #4 Economic Interdependence

Scarcity 

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An infinite amount of human and non-human resources, produces limited maximum amounts of each economic good

Economic Sustainability 

Support long-term economic growth without negatively impacting social, environmental, and cultural aspects of the community

SWOT

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S - Strengths

W - Weakness 

O - Opportunities 

T - Threats

The Global Economy

• Trade between countries and markets around the world

• Mutually beneficial to countries involved

__**Absolute Advantage**__

One country has a natural complete advantage over another country in producing a good or service efficiently

__**Comparative Advantage**__

One country produces a good or service at a lower opportunity cost than another

Factors Influencing Comparative Advantage

1. Climate: Better climate in producing a certain product

2. Factors of Production: More of a natural resource

3. Technology: Greater access to technology

Differentiated Products

Multiple counties sometimes sell the same types of goods as customers prefer to buy differentiated goods based on varied style, taste, etc.

Imports

Goods and service brought into Canada from another country to be sold to Canadian customers

Exports

Goods and services produced in Canada and sold abroad

**Trade surplus** means more exports than imports 

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**Trade deficit** means more imports than exports 

**Free Trade** 

• There are no additional taxes (tariffs) or other trade restrictions placed on imports

• Trade happens between countries without any additional barriers put into place by the government