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The Basics of International Trade: A Classroom Experiment

Alberto Isgut, Ganesan Ravishanker () and Tanya Rosenblat
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Ganesan Ravishanker: ITS, Wesleyan University

No 2005-013, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: We introduce a simple web-based classroom experiment in which students learn the Ricardian model of international trade. Students are assigned to countries and then make individual production, trade and consumption decisions. The analysis of experimental data introduces students to the concepts of absolute and comparative advantage, relative prices, production possibility frontier, specialization, gains from trade, utility maximization and general equilibrium. Students learn about the relationship between individual decision-making and aggregate economic activity. The associated software, Ricardian Explorer, is easy to setup and requires minimal preparation time for instructors. The game is developed as a tool to complement courses in international trade, but it can be used in introductory and intermediate microeconomics courses as well. The analysis of teaching effectiveness has demonstrated that integration of this experiment in the curriculum enhances student learning.

Keywords: Absolute advantage; comparative advantage; specialization; production possibility frontier; gains from trade; utility maximization; general equilibrium; classroom experiments (search for similar items in EconPapers)
Pages: 24 pages
Date: 2005-05
New Economics Papers: this item is included in nep-exp, nep-int and nep-upt
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Handle: RePEc:wes:weswpa:2005-013