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international trade - Coggle Diagram
international trade
comparative advantage
inability of a nation to produce a good more efficiency than other nations, but an ablility to produce that good more efficiency than it does any other goods.
comparative advantage explains how trade can create value for both parties even when one can produce all goods with fewer resources than the other
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a country is said to have a comparative advantage in the production of good when it can produce it at a lower opportunity cost than its trading partners
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protectionism ; policy , reasons and type of protection
this is policy practiced by a nation on other nations in which certain barriers are imposed on trade for economic or non-economic reasons
there are serveral reasons to be considered for a country to protect its existing industries
protect infant and local industry
correct the balance of payments
protect certain key industries
prevent dumping
control unemployment by reducing imports which can create jobs producing imports substitute
type of protection
- tariff
- quota
- embargo
- foreign exchange control
- export subsidies
- import licensing
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