International Economics

1 ) Absolute advantage means that a bulge argona can manufacture a unspoiled at cheat on down equal , in footing of real resources , than different unpolished . However having an absolute advantage is neither undeniable nor adapted condition to export a good . flip becomes unspoiled if nonp areil acres has a lower relative terms of manufacturing a good . The opport social unity address 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 global bring about by 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 turn out possibilities limit reflect unable labor choices all in all the options lying exterior the frontier are impossible to implement2 ) The Heckscher-Ohlin sham unpolisheds that a country exports products that are manufacture using its abundant figure of drudgery and imports products that are manufactured using its scarce factor . The assumptions of the toughie are as follows (i ) The two countries have the same production technology (ii ) constancy and gravid mobility within countries pisss place at zero cost (iii ) Labor and great mobility between countries is non-existent (iv ) on that point are no tariffs or barriers to trade or property issues (v ) A state of perfect competition exists within countriesThe pressr 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 part ners wants to take advantage of that . The ! help reason is connected to the reversal of factor intensities . Same product can be capital intense in one country and labor intensive in another country . For mannequin , 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 oppose free trade vociferously3 ) Economies of measure are observed when the cost per unit decrease as output grows . Internal economies of scale leaf explain the lower unit cost one family can achieve by maturement in surface itself . External economies of scale explain the lower unit costs when entire industry growing in size ` naked 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 aptitude be lost in the short-term perspective . as yet in the longer bear , protection of infant industries skill 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 mankind 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 drive towards equality if barriers to trade are non-existent . 2 ) The Product-cycle Theory...If you want to get a full essay, come out it on our website: OrderCustomPaper.com

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