The Basis for Trade

Trade enables countries to move beyond their previous resource and productivity constraints. When countries specialize in producing those goods in which they have a comparative advantage, they maximize their combined output and allocate their resources more efficiently.

Upon completion of this assignment, you should be able to:

Demonstrate the importance of comparative advantage in the allocation of resources.
Incorporate biblical and ethical principles into economic theory and practice.
Textbook: Economics for Managers
Media: Chapter 3 Animations
File: Workshop Two Chapter 3 Animation Transcripts
Video: Comparative Advantage:
Background Information
The basis for trade is determined via comparative advantage. A country enjoys an absolute advantage over another country in the production of a product if it uses fewer resources to produce that product than the other country does. A country has a comparative advantage in the production of a product if it can produce that product at a lower opportunity cost in terms of other goods.

Ancient Babylon was a center of trade. The city is mentioned in the Bible as early as Genesis 11 in the description of the tower of Babel and finally in the book of Revelations. Babylon becomes a symbol of idolatry and pride leading to its destruction. As you study the basis of trade today, you should also understand how trade is laced into the Bible.

Before you begin this assignment, read Chapter 3 in Economics for Managers.
Watch the following animations. To move through the animation sequence, click Nextuntil you reach the end of that animation sequence. These animations will prepare you for the discussions and other assignments in this and upcoming workshops.
Animation 3.5
Animation 3.6
Animation 3.7
Animation 3.8
Also watch the Comparative Advantage video at
Navigate to the threaded discussion and respond to the following:
What is the basis for trade (absolute or comparative advantage)?
How can an individual or a country gain from specialization and trade? (Please use an example.)
How was traded affected by the pride and idolatry of Babylon? Refer to your Bible and Internet Bible commentary found at
Your initial post is due by the end of the fourth day of the workshop.
Read and respond to at least two of your classmates’ postings, as well as all follow-up instructor questions directed to you, by the end of the workshop.
Your postings should also:
Be well developed by providing clear answers with evidence of critical thinking.
Add greater depth to the discussion by introducing new ideas.
Provide clarification to classmates’ questions and provide insight into the discussion.
Click here to access the discussion topic.


P&G Case Study
Introduction and Alignment
This case illustrates how a company’s pricing policies depend on how consumers respond to price changes. Your reading will build on your prior knowledge of supply and demand analysis, and will incorporate various forms of elasticity to solidify these concepts from a managerial perspective.

Upon completion of this assignment, you should be able to:

Differentiate among price elasticity of demand, income elasticity, and cross-price elasticity.
Incorporate biblical and ethical principles into economic theory and practice.
Article: The Extravagance of God:
Textbook: Economics for Managers
Background Information
A recession can alter consumers’ overall sensitivity to various products and services. In this particular case, P&G was facing price structure issues that were affecting both standard and premium goods. Given the elasticity of the product(s), the company needed to develop a new price structure.

Read Chapter 3 in Economics for Managers.
Read the case study “Demand Elasticity and Procter & Gamble’s Pricing Strategies” on page 47 of Economics for Managers.
Based on these facts, answer the following questions:
Should Procter & Gamble use reward or loyalty programs to influence demand and price elasticity for its products?
How would these programs influence current and future demand?
Why would the price elasticity of demand for an individual firm’s product be greater than the elasticity of the overall product market?
Read Luke 7:37-38 and the article “The Extravagance of God” by Makoto Fujimura:
How is price elasticity related to the perfume poured on Jesus’ feet?
Write a 500-word paper answering the preceding questions.
Incorporate a minimum of two sources and your Bible in addition to the text in this assignment. Your two sources may include scholarly sources, credible newspapers, trade journals, or websites. Be sure to use OCLS to find these sources.
Use APA formatting for your paper and citations.
When you have completed your assignment, save a copy for yourself and submit a copy to your instructor using the Dropbox by the end of the workshop.
Click here to access the Dropbox.


Performance Profitability – Bibliography: Project Part 2
Introduction and Alignment
Managers in organizations are continually required to evaluate the impact of variables in the internal and external economic environment that will affect their organization’s performance. In today’s global environment, marketing and trade practices require analysis of basic economic functions that extend to international business operations, including pricing strategies, currency fluctuations, technology, open and closed economies, and differing monetary policies. In this project, you will have an opportunity to synthesize these many variables on the performance and profitability of a chosen organization, and produce a comprehensive recommendation to the corporate management team.

File: Project Description
Background Information
You have been working as an economic consultant, and you have seen a significant number of firms needing outside help to assist in business policy and formulation. Because of your strong reputation, you have just been hired as a consultant for one of the following organizations:

For this particular project, you will be reporting to the executive officers in the organization (CFO, CTO, CIO, CEO). Your task will be to evaluate the trade policies, and economic variables that have a verifiable impact on global operations.

Before beginning this assignment, please read the Project Description document, if you have not already done so.
Submit an annotated bibliography of at least 10 academic sources that you will use in your final project.
Your annotated bibliography should include five scholarly sources and five from credible newspapers, trade journals, and/or websites. Be sure to use OCLS to find these sources. Each annotation should:
Summarize the content of the source.
State why the source is relevant to the topic.
State why the source is credible.
Be sure to use APA formatting. (Your entire project must be APA formatted.)
When you have completed your assignment, save a copy for yourself and submit a copy to your instructor using the Dropbox by the end of the workshop.

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