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  • Trade Theories: DR Vipul Jain PHD, Mba, Mba (Ha), Pgdba (Mba), Ma (Eco.), PGDMSM Aima Accredited Faculty

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    Saurabh Sharma
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    The document discusses different trade theories including mercantilism, absolute advantage, and comparative advantage. It provides an example of absolute advantage between countries, with Britain having an advantage in textiles, India in software and labor, and others. The assumptions of absolute advantage theory are that trade occurs between two countries and commodities, with free trade and labor being the only cost of production. Comparative advantage theory is also mentioned.

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    TRADE THEORIES

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    The document discusses different trade theories including mercantilism, absolute advantage, and comparative advantage. It provides an example of absolute advantage between countries, with Britain having an advantage in textiles, India in software and labor, and others. The assumptions of absolute advantage theory are that trade occurs between two countries and commodities, with free trade and labor being the only cost of production. Comparative advantage theory is also mentioned.

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    12 views5 pages

    Trade Theories: DR Vipul Jain PHD, Mba, Mba (Ha), Pgdba (Mba), Ma (Eco.), PGDMSM Aima Accredited Faculty

    Uploaded by

    Saurabh Sharma
    The document discusses different trade theories including mercantilism, absolute advantage, and comparative advantage. It provides an example of absolute advantage between countries, with Britain having an advantage in textiles, India in software and labor, and others. The assumptions of absolute advantage theory are that trade occurs between two countries and commodities, with free trade and labor being the only cost of production. Comparative advantage theory is also mentioned.

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    © All Rights Reserved
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    TRADE THEORIES

    Dr VIPUL JAIN
    PhD, MBA, MBA (HA), PGDBA
    (MBA),MA (ECO.), PGDMSM
    AIMA ACCREDITED FACULTY
    COUNTRY A COUNTRY BTOTAL

    CLOTH 100 250 350


    RICE 200 160 360

    CLOTH 0 400 400


    RICE 500 0 500
    MERCANTILISM

    ENCOURAGE EXPORTS, DISCOURAGE IMPORTS

    ABSOLUTE ADVANTAGE

    BRITAIN (TEXTILE INDUSTRIES)


    INDIA ( SOFTWARE & LABOR)
    FRANCE ( WINE & DEFENCE)
    USA ( AIRPLANES)
    JAPAN ( NANO TECHNOLOGY)
    ASSUMPTIONS OF ABSOLUTE ADVANTAGE

    TRADE IS BETWEEN TWO COUNTRIES

    ONLY TWO COMMODITIES ARE TEADED

    FREE TRADE EXISTS BETWEEN THE COUNTRIES

    THE ONLY ELEMENT OF COST OF PRODUCTION IS


    LABORs
    COMPARATIVE ADVANTAGE THEORY

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