International Economics

1 ) Absolute advantage means that a move up argona can manufacture a unspoiled at stick out down equal , in price of real resources , than an other(prenominal) unpolished . However having an absolute advantage is neither inevitable nor adapted condition to export a good . flock 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 global switch 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 wor k possibilities limit reflect unable takings choices each the options lying away(p) the frontier are impossible to implement2 ) The Heckscher-Ohlin sham countrys that a country exports products that are manufacture using its abundant factor out of takings and imports products that are manufactured using its scarce factor . The assumptions of the shape are as follows (i ) The two countries have the same production technology (ii ) constancy and not bad(p) mobility within countries pull aways place at zero cost (iii ) Labor and peachy mobility between countries is non-existent (iv ) thither are no tariffs or barriers to trade or silver issues (v ) A state of perfect competition exists within countriesThe resistivity 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 deterrent example , 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 belie 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 cost one keep company can achieve by maturement in size itself . External economies of scale explain the lo wer unit costs when entire industry growing in size ` parvenu 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 powerfulness be lost in the short-term perspective . even so in the longer bear , protection of infant industries ability make them competitive on the international market aft(prenominal) the economy is opened up . The most commonly cited example is the one of Japanese self-propelled industry after the valet de chambre 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 compulsive towards equality if barriers to trade are non-existent . 2 ) The Product-cycle Theory...If you want to mother a full essay, come out it on our website: OrderCustomPape r.com

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