International Trade

• Concept: Countries benefit by specializing in goods they produce at lower opportunity cost.
• Why? Allows countries to consume more than their PPF.

Example:

• Pakistan produces textiles cheaply.
• Japan produces cars efficiently.
• If they trade → both gain more than producing everything themselves.

Graph:

• PPF shows country’s production limits.
• Trade allows them to consume outside their PPF.

Key Insight: Trade increases total world output & efficiency.