Advantages of International Trade

Advantages of International Trade - International trade has...

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Advantages of International Trade 1 Advantages of International Trade Economic Theory ECO/205 May 27, 2009
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Advantages of International Trade 2 International trade has one primary advantage, which are trade gains that are based by using the comparative advantage. Comparative advantage is where a country specializes in offering service and goods that they are the best in producing comparatively. If one country can produce a good and do it with a cost that is low, that country will have a comparative advantage over the other countries that country is in trades with. This may also be known as opportunity cost. Having an abundance of a resource, which is a factor in the production of a good will create this comparative advantage. One example would be the country of France. France has an advantage in the production of wine, which can be contributed to their abundance of land that is productive and their climate (Alterman, 1988). Alterman (1988) stated, “Terms of trade are defined as the price index of exports divided
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This note was uploaded on 04/19/2010 for the course N/A ECO 205 taught by Professor N/a during the Summer '09 term at University of Phoenix.

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Advantages of International Trade - International trade has...

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