MGCR 382 Lecture 1: Trade Theory
22 Jan 2015
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Mgcr 382: international business - lecture 1: trade theory. Definitions: trade voluntary exchange of goods/services. As it is a voluntary act, trade only occurs when both parties that are involved in trade have something to gain from one and another. International trade- trade that happens between residents of two countries: export is the sale of goods to a foreign resident. Import is the purchase of goods from a foreign resident. Trade is voluntary; so there needs to be a gain from trade that induces people to engage in voluntary exchange. Absolute advantage or competitive advantage are two types of tools that are used to understand if trade between countries is feasible or not. Some countries are just better at producing a certain commodity then another. Therefore it may be good for the country to specialize in that certain product. In france- it takes 1/2 hours to produce one bottle of wine, and 1/3 hours to produce 1 radio.
