COMMERCE 1E03 Chapter Notes - Chapter 3: Franchising, Absolute Advantage, Comparative Advantage
28 Jul 2016
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Exporting-is selling products (i. e goods and services) to another country. Global trade enables a nation to produce what it is most capable of producing and to buy what it needs from others in a mutually beneficial relationship. This happens through the process of free trade. Free trade-is the movement of goods and services among nations without political or economic barriers. ******study figure 3. 2 for the pros and cons of free trade***** Global trade- is the exchange of goods and services across national borders. Comparative advantage theory- states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products it cannot produce as effectively or efficiently. In practice, this theory application does not work so neatly. For various reasons, many countries decide to produce certain agricultural, industrial, or consumer products despite a lack of comparative advantage.
