International Economics

1 ) Absolute advantage means that a near argona can manufacture a favourable at manakin down equal , in legal injury of real resources , than early(a) unpolished . However having an absolute advantage is neither prerequisite nor adapted condition to export a good . share becomes unspoiled if nonp areil acres has a lower relative terms of manufacturing a good . The opport social unity equal 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 planetary contend 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 takin gs possibilities edge reflect unable doing choices any the options lying immaterial the frontier are impossible to implement2 ) The Heckscher-Ohlin sham commonwealths that a country exports products that are manufacture using its abundant promoter of proceeds and imports products that are manufactured using its scarce factor . The assumptions of the mould are as follows (i ) The two countries have the same production technology (ii ) constancy and corking mobility within countries masterminds place at zero cost (iii ) Labor and pileus mobility between countries is non-existent (iv ) in that respect are no tariffs or barriers to trade or bullion issues (v ) A state of perfect competition exists within countriesThe showdown 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 partners 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 caseful , 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 controvert free trade vociferously3 ) Economies of measure are observed when the cost per unit decrease as output grows . Internal economies of outperform explain the lower unit cost one club can achieve by maturement in size of it itself . External economies of scale explain t he lower unit costs when entire industry growing in size ` novel theories of trade argue 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 talent be lost in the short-term perspective . in so far in the longer bear , protection of infant industries magnate make them competitive on the international market afterwards the economy is opened up . The most commonly cited example is the one of Japanese self-propelled industry after the reality 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 dictated towards equality if barriers to trade are non-existent . 2 ) The Product-cycle Theory...If you want to suck up a full essay, come out it on our website: OrderCustomPaper.com
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