IB 3101 Lecture Notes - Lecture 3: Autarky, New Trade Theory, Absolute Advantage

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A: yes, they make a higher quality product than china they have been in the business longer they make custom furniture. Q: will all furniture manufacturing come back to the us. Theories of trade explain why countries produce and export certain goods and services and import others. Usually trade theories start from a hypothetical situation of complete lack of trade. Free trade occurs when governments do not influence, through quotas, tariffs, or subsidies what their citizens can buy from other countries or what they can produce and sell to other countries. There really are no countries in which pure free trade exists. Countries gain from trade by being able to specialize in producing (for local consumption and export) goods they make relatively more efficiently and import goods they make are less efficiently. The pattern of international trade refers to which countries produce goods. Some patterns of trade are fairly easy to explain.

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