Why Do Nations Trade Based On The Concept Of Comparative...

1-why do nations trade based on the concept of comparative advantage? When a company or someone can produce at a cheaper cost than anyone else that is a comparative advantage theory. In spite of there are many criticisms for comparative advantage theory, but some people supported comparative advantage theory and they have talked about the advantages its, such as Adam Smith and David Ricardo. The advantage of using comparative advantage in nations trade are: - The countries can select lower cost method to produce its goods by comparing the costs of producing goods among countries. - It permits countries and companies to establishing partnerships with foreign countries to produce with high efficiency or exchange the new products. And the rule is each country must have a comparative advantage or neither country has it. - Also, this is cause for the higher price received for every nation s comparative advantage goods would lead each nation to have specialize in that good. This means each nation needs to import from others countries because each country ha s different goods, and that will lead to raising of the nations economy. - Each country can export only special goods and it can import from many countries to every nation benefits from free trade. 2-Explicate deficits caused by un-competitiveness. The main reason to occurs an account deficit that is imports value is higher than exports value. There are also different factors that could cause a current accountShow MoreRelatedBusiness in the International Economy1704 Words   |  7 Pagesthe price is $5, the firm: Ans. should produce output equal to 7 4. The most recent phase of globalization is charactized by which of the following? Ans. Enormous growth of cross-border trade and investment. 5. Many firms have successfully lowered trade and investment barriers by Ans. Petitioning the World Trade Organization. 6. Which of the following most supports Country A and Country B becoming an economic bloc? Ans. 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