Monday, June 10, 2019

International trade Term Paper Example | Topics and Well Written Essays - 1250 words

International softwood - Term Paper Example tidy sum you explain why? Trade restrictions are put by government including tariffs, issue quotas and trade barriers. This is done to outgrowth electronic network exports by limiting imports. When net exports increase it creates a more favorable balance of trade, the domestic production of the country boost up, which results in increased domestic income and employment. But Most economists get this argument is wrong because trade restrictions can prove to be harmful as well, if there will be trade restrictions the domestic tolls of the goods will increase, and pile will be forced to pay higher prices for the domestic products, also the countries wont be able to benefit from proportional reward. putting trade restrictions wont only be harmful for the customers but it will also be harmful for the firms because usually they take advantage of Comparative Advantage and import raw material that are not available in their country, but by putting trade restrictions they will have to come that certain raw material in their own country which will eventually cost them more and it will ultimately effect the price of the net goods, making it more expensive. In long run Trade restrictions can also gives fewer choices to the customers and no variety because they will only have the option to buy the domestic products. Also putting trade restrictions would result in inefficiency from the domestic producers because there wont be a competition on a global scale and their productivity will decrease. Also International trade is the basic source of bringing FOREX in the country. By putting trade restrictions the country wont be available to avail from all these advantages. 2) Suppose that in the absence of trade, the Canadian price for bicycles was higher than the world price for bicycles. Would allow international trade mean that Canada would import or export bicycles? Who in Canada would benefit and who would lose with a f ree trade policy, and would the gains be great than the losses? Free trade policy is also called laissez-faire which means there wont be any interference from the government side, and manufacturers are free to import and export and manufacture according to their own will. If Canadian price for bicycles is higher than the world price for bicycles then Canada would advantage from Comparative Advantage and import bicycles rather than exporting it. Allowing trade would benefit Canada in long run because domestic prices for bicycles are higher than the world price and the citizens of Canada are nonrecreational higher prices unnecessarily, Trade will increase competition in Canadian bicycle market and it will help in reducing monopolistic price and the cons that generate from that. It will also encourage local investors and manufactures to perform better and keep stable bicycle pricing in the market. It will also increase the variety in Canadian bicycle market and citizens will have mor e options. Also this will benefit the local producers as they can import raw material for bicycles from other countries who are selling it for cheaper rate and this will help lower marginal cost and decrease the prices of bicycle in Canada. 3) What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?

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