1.

Differentiate the theory of absolute advantage from the theory of comparative

advantage.
> Absolute advantage is the ability to produce a good using fewer inputs than
another producer, while comparative advantage is the ability to produce a good at a
lower opportunity cost than another producer (reflecting the relative opportunity
cost).
> The Absolute Advantage is the country's inherent ability to produce specific
goods efficiently and effectively at a relatively lower marginal cost. However,
Comparative Advantage refers to the country's capability to produce the specific
good at lower marginal cost and opportunity cost.
> AA. means that you can do more of something during a given time
>CA. pays a lower opportunity cost; who can produce a good for the lowest
opportunity cost.

2. What is the balance of payments?

> The balance of payments (BOP) is a statement of all transactions made between
entities in one country and the rest of the world over a defined period of time,
such as a quarter or a year.

3. What is protectionism? How do certain countries practice it?

> Protectionism is the practice of following protectionist trade policies. A
protectionist trade policy allows the government of a country to promote domestic
producers, and thereby boost the domestic production of goods and services. Also,
GDP can be used to compare the productivity levels between different countries.
> Protectionism is the economic policy of restricting imports from other countries
through methods such as tariffs on imported goods, import quotas, and a variety of
other government regulations.

4. Why are there trade barriers?

> Countries put up barriers to trade for a number of reasons. Sometimes it is to
protect their own companies from foreign competition. Or it may be to protect
consumers from dangerous or undesirable products. Or it may even be unintended, as
can happen with complicated customs procedures.

5. Based on the article "Bra Matters: From Feminism to trade wards" what can an
exporting company do when faced with import quotas? Why do trade liberals
favor the use of tariffs instead of import quotas?
6. Identify some imported products. What is the comparative advantage of the
countries from where these products are imported?