Lemonade and Cookies


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Every day, people from various countries trade for goods and services with people from other countries. People trade particular goods because they have the comparative advantage in making those goods. In this lesson, you will read through an interactive story problem to learn about trade, specialization, and the worldwide effects of trade.


Your job is to read through the interactive story and help solve problems by answering the questions and doing the activities. Throughout the story you will learn about resources, wants, trade, profits, specialization, trade-offs and comparative advantage.


Read the story below. You may click on the words in BOLD to find out their definitions. There will be questions throughout the story that you will answer online.



In this story, you represented a person from one country and your neighbor represented a person from another country. You are now able to understand that if people from each country specialized in the product or products for which they have the comparative advantage, they they could trade with people from another country where the comparative advantage is different and the world would become more efficient.


Take this short online quiz to see what you have learned.


  1. Why is China able to specialize in factory and production work?
  2. Name two brands of Japanese electronics that you know.
  3. How does the US Government protect the steel industry in the United States?
  4. Do the people of Spain live to work or do they work to live?
  5. Give the definition of comparative advantage.

Choose one of the four choices below to complete:

  1. Do a report on a country of your choice to find out what its comparative advantage is. Find out if people in this country are involved in free trade or if they have any free trade agreements.
  2. Using the World Factbook web site find and list several of the Exports - commodities from five different countries. Use the activity below to record your answers.

    1. Identify a country and list its Exports- commodities.

    2. Identify a second country and list its Exports- commodities.

    3. Identify a third country and list its Exports- commodities.

    4. Identify a fourth country and list its Exports- commodities.

    5. Identify a fifth country and list its Exports- commodities.

  3. Use the web sites below to write a short paper answering the following questions
    The World Trade Organization
    Socialism Today
    • Briefly describe the purpose of the World Trade Organization (WTO).
    • Find out why China has wanted to join the WTO for so long.
    • What reasons did WTO have to keep China out?
  4. Go to the library and check out "The Choice: A Fable of Free Trade and Protectionism" by Russell Roberts, Washington University in Saint Louis. Read the book and then write a paper on your thoughts on the subject.