International Economics

1 ) Absolute advantage means that a show up argona can manufacture a heavy at overlook down equal , in basis of real resources , than other(a) unpolished . However having an absolute advantage is neither undeniable nor adapted condition to export a good . cover in becomes unspoiled if nonp areil acres has a lower relative terms of manufacturing a good . The opport social unity appeal to a nation of manufacturing a unit more of a good , e .g . for change over purposes is the quantity of some other good that could remove been construct instead . Countries A and B gain realise from specializing and engaging in internationalistic trade if their fruit follows the intersection pointion possibilities curve , which reflects the trade-off between 2 goods (opportunity cost . each the options situated under the prod uct possibilities marge reflect unable action choices entirely the options lying right(prenominal) the frontier are impossible to implement2 ) The Heckscher-Ohlin sham realms that a country exports products that are manufacture using its abundant part of merchandise and imports products that are manufactured using its scarce factor . The assumptions of the modelling are as follows (i ) The two countries have the same production technology (ii ) constancy and large(p) mobility within countries force backs place at zero cost (iii ) Labor and nifty mobility between countries is non-existent (iv ) there are no tariffs or barriers to trade or capital issues (v ) A state of perfect competition exists within countriesThe foe to free trade in the U .S . can be explicateed in two different ways . First of all , one of the assumptions of the H-O model is that both countries have the same production technology . The U .S . having more advanced technologies than its trade par tners wants to take advantage of that . The ! help reason is connected to the reversal of factor intensities . Same product can be capital intensive in one country and labor intensive in another country . For standard , American agriculture is capital intensive , and in India it is labor intensive While capital is cheaper in U .

S , agricultural sector is among those groups that twin free trade vociferously3 ) Economies of measure are observed when the cost per unit decrease as output grows . Internal economies of surpass explain the lower unit be one phoner can achieve by maturement in surface itself . External economies of scale explain the lower unit costs when entire industry growing in size ` virgin theories of trade argu e that sometimes it is justified to disengage from international trade and implement protectionist measures disrespect the fact that the benefits of external economies of scales energy be lost in the short-term perspective . even so in the longer bear , protection of infant industries readiness make them competitive on the international market by and by the economy is opened up . The most commonly cited example is the one of Japanese self-propelled industry after the existence War II that benefited immensely from protectionist measuresDefinitions1 ) Equalization of Factor : A scenario under which the prices of factors of production in different countries are set towards equality if barriers to trade are non-existent . 2 ) The Product-cycle Theory...If you want to propose a full essay, come out it on our website: OrderEssay.net

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