Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Focus: International Trade & Comparative Advantage · Objective 8 · SLO A & B

📋 Module Overview Page — "Start Here" (Canvas: Page, published)

Week 13 — International Trade & Comparative Advantage

This week we open the economy up to the rest of the world. Every country could, in principle, try to produce everything it needs — but almost none do, and the reason is one of economics' most elegant (and most misunderstood) results: comparative advantage. You'll learn why a country can gain from trade even if it's worse at producing everything than its trading partner, how to find a mutually beneficial terms of trade, and how the trade balance (exports minus imports) fits into the bigger macro picture — including why a trade deficit is not automatically "losing."

A calendar note: Thursday, Nov 26 is Thanksgiving — no class meets. Friday, Nov 27 the campus is closed. We meet Monday and Wednesday this week only. Because Friday is closed, Discussion 13's initial post moves up to Wednesday, Nov 25 (instead of the usual Friday) — replies and everything else still land on the normal Sunday due date.

The big question: Why can two countries both gain from trade even when one of them is better at producing everything — and what does a country's trade balance actually tell us?

By the end of this week, you can:

• compute each country's opportunity cost of producing each good from a simple production table, and use those opportunity costs to identify which country has the comparative advantage in which good;
• explain why comparative advantage — not absolute advantage — is what determines the gains from specialization and trade, and correctly distinguish the two;
• test whether a proposed terms of trade falls in the mutually beneficial range and show, with a concrete production/consumption table, that both countries can consume more after trade than before;
• read a country's net exports (NX = exports − imports) and describe a trade deficit or surplus neutrally — as a fact about trade flows, not a verdict about economic health — and weigh, evenhandedly, the strongest case for freer trade against the strongest case for protecting industries with tariffs.

Do this, in order:

1. Read & watch — the Week 13 resources (≈35 min). → Readings & Resources page
2. Lecture Tutorial — work through comparative advantage, the terms of trade & the trade balance with your AI tutor (≈45 min). Due Sun, Nov 29. → submit the chat share link + summary
3. Practice Exercises — 6 quick reps, ungraded (≈15 min).
4. Quiz 13 — 10 questions, closed to AI (≈20 min). Due Sun, Nov 29.
5. Discussion 13 — "Free trade, fair trade, or tariffs?" Initial post Wed, Nov 25 (moved up — campus closed Fri), replies Sun, Nov 29.
6. Assignment 13 — the comparative-advantage & trade-balance problem set (100 pts). Due Sun, Nov 29.
7. Workshop 13 — Graph & Model Workshop — "Comparative Advantage & the Terms of Trade" (50 pts). Due Sun, Nov 29.

A note before you start: the classic trap this week is absolute vs. comparative advantage — assuming that whichever country is "better at everything" should produce everything. It shouldn't, and by the end of this week you'll be able to prove it with a table. We'll also catch a chatbot flipping an opportunity-cost ratio and treating a trade deficit as an automatic verdict on the economy's health. You've got this. 💪

📣 Welcome Announcement (Canvas: Announcement; available_from_offset_days = 0 — posts Mon, Nov 23)

Subject: Week 13 — why does ANY country specialize? 👋

Hi everyone,

Quick logistics: this is a short week. Thursday, Nov 26 is Thanksgiving (no class) and the campus is closed Friday, Nov 27. We only meet Monday and Wednesday. Because Friday is closed, Discussion 13's initial post is due Wednesday, Nov 25 instead of the usual Friday — everything else stays on the normal Sunday, Nov 29 due date. Happy Thanksgiving!

Here's the whole week in one sentence: a country can gain from trade even if it's worse at producing every single good than its trading partner — as long as it specializes in whatever it gives up the LEAST to produce. That's comparative advantage, and it's one of the few genuinely surprising results in all of economics.

This week, don't miss:

• Absolute vs. comparative advantage — being "better at everything" (absolute advantage) is completely different from having the lower opportunity cost (comparative advantage) in a particular good. Trade gains come from the second one, not the first.
• The terms of trade — once we know each country's opportunity cost, there's a whole range of trade ratios that leave both countries better off. We'll test one and build a table showing both sides consuming more after trade than before.
• The trade balance — exports minus imports (NX). A trade deficit means a country imported more than it exported — a fact about flows, not automatically "losing." We'll also open the tariffs debate evenhandedly: the case for freer trade and the case for protecting specific industries and communities both get their full due.

Start with the Module Overview ("Start Here"), then the readings, then your AI Lecture Tutorial. Bring a question to class Monday — the best ones usually come from "wait, why would the worse country ever trade?"

Happy Thanksgiving, and see you Monday,
Prof. Ashford