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Theory of International Trade Unit 2

Theory of International Trade Unit 2

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Published by PRIYANK

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Categories:Types, School Work
Published by: PRIYANK on Sep 23, 2010
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11/01/2011

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Theory of International Trade
 
W
hy Trade?
Countries benefit from foreign trade
They can import resources they lack at homeHigher standards of living and greater satisfactionThey can import goods for which they are a relativelyinefficient producer Specialization often results in increased output andeconomies of scaleContributes to global interdependence
 
C
oncepts of Trade
Mutual Gains From Trade
When trade is voluntary:
 ±
Both sides must
expect togain from it, otherwise theywould not trade
Scarcity and
C
hoice
Wants exceed resources
 ±Choices are necessitatedby scarcity

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