Unit INTERNATIONAL TRADE

Module ECONOMICS OF INTERNATIONAL TRADE

AE5-IBT INTERNATIONAL BUSINESS & TRADE Units: Page|1

WRITTEN TASK
ECONOMICS OF INTERNATIONAL TRADE

Name : PILI, JEMALYN A. Score :

Date : BA4MA

DIRECTION: Write your answers on the space provided:

1. How can the manager of an international company use the comparative advantage theory in
decision making? For example, suppose the company is Apple Computer and the manager is
looking for site to locate a new plant.
The manager can use the comparative advantage theory as a tool to identify a better place
for a new plant. It will help him determine the opportunity cost of a computer in each
country because producing one computer can require much labor. This theory helps you
choose what to prioritize more.

2. Explain the stages of the international product cycle. How can a manager use this theory in
decision making? Use the case of the auto industry to illustrate your answer.

Illustration:

Product life cycle shows the stages a product goes through over time in relation to it’s
sales. Which individual product products have their own life cycles. It is also important to
understand wider market trends.

For example, you bought an auto because of its high demand and it’s also on trend. You
bought it in a quite big amount. At this moment, the product in in it’s growth stage.

A year later, there was an excess supply of this auto which were hugely discounted due to
it’s decline stage.

Understanding the product life cycle also gives managers greater control. They are also be
able to predict when revenue will flow in and calculate the profitability of product lines.
They can plan the introduction and withdrawal of products. Some product lines will be

PREPARED BY: APPROVED FOR IMPLEMENTATION:

FIRST
WEEK Meeting
QUARTER CHRISTOPHER R. DULCE MR. WILBERT A. MAÑUSCA
Subject Teacher School Administrator
 Unit INTERNATIONAL TRADE

Module ECONOMICS OF INTERNATIONAL TRADE

AE5-IBT INTERNATIONAL BUSINESS & TRADE Units: Page|2

highly seasonal. Managers therefore need to plan the appropriate type and level of
promotion for different products.

3. Is the exchange rate important in the theory of comparative advantage? Why or why not?
Yes it is important. People prefer buying things abroad than in the Philippines. In some
foreign countries, they have cheaper price when you exchange it from Philippine peso. It
is important because it can bring you less opportunity cost to pay. This is also the reason
why there are so many tourists in Thailand, Indonesia, and other Southeast Asian countries
because of cheap accommodations.

PREPARED BY: APPROVED FOR IMPLEMENTATION:

FIRST
WEEK Meeting
QUARTER CHRISTOPHER R. DULCE MR. WILBERT A. MAÑUSCA
Subject Teacher School Administrator