Chapter 4 - WhyNationsTrade Expandsmarkets Exports: Imports:

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Why Nations Trade Boosts economic growth Expands markets More efficient production systems Less reliance on economies of home nations Exports: Domestically produced goods and services sold in markets in other countries Imports: Foreign-made products and services purchased by domestic consumers International Sources of Factors of Production Decisions to operate abroad depend upon availability, price, and quality of: Labor Natural resources Capital Entrepreneurship Companies can spread risk throughout nations Size of the International Marketplace As developing nations expand into the global marketplace, opportunities grow Many developing countries have posted high growth rates of annual GDP United States 4.4%
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China 11.1% India 9.4% Population Size and Prosperity Though developing nations generally have lower per capita income  Top Trading Partners With the United States Canada China Mexico Japan Absolute and Comparative Advantage Absolute advantage: Country can maintain a monopoly or produce at a lower cost than  any competitor Example: China’s domination of silk production for centuries Comparative advantage: Country can supy a product more efficiently and at lower cost 
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This note was uploaded on 03/05/2012 for the course ADMINISTRA 011:100 taught by Professor Jayrereaves during the Fall '11 term at Rutgers.

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Chapter 4 - WhyNationsTrade Expandsmarkets Exports: Imports:

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