Quiz 12: International Trade
The trade increases efficiency through specialization. The combinations of good which is not available because of constraint in production possibility curve can be now available to the consumers. One country can non make everything it wish to consume or can produce it with a higher opportunity cost. This is same as any individual who wish to become self-sufficient by producing for themselves all the things that they need and want. The world is becoming increasingly internationalized. As communication and transportation increase we are becoming more connected with other part of the country. The international trade creates job within a country. Students can work fo a multinational corporation. The foreign faculties are coming to teach into the campus and student are sharing their knowledge with other international students.
The World trade Organization is an international organization dealing with trade between countries and ensures that the trade occurs as smoothly and freely as possible. WTO also settles trade related disputed between countries. 10 benefits of WTO system: 1. It ensures global peace. 2. It constructively handle the trade related disputes between countries 3. Reduce inequality by following basic rules 4. As protections are costly; free trade reduces price and cut the cost of living. 5. Free trade raises personal and national income but some restriction may be necessary in this case. 6. Free trade gives the consumer wide varieties of product to choose from it also increase quality. 7. Trade promotes growth and growth increases employment. 8. Promotes a more economically efficient system. 9. The policies shield the government from lobbyist and help to trade off policy which is in favor of everybody. 10. The rules ensure certainty and clarity in business trading condition and prevent the government to take unwise policies. 10 common misconceptions: 1. The rules are results of agreement and negotiations; it does not tell the government how to design a trade policy. 2. The WTO promotes free trade but the extent of the liberalization is subject of negotiation between trading partners. 3. WTO promotes free trade but not at the cost of development. 4. Commercial interest never a priority over the environment. 5. WTO never dictates any government, any negotiation regarding food safety, human health and safety is concern of the negotiating government and the agreement reflects their concern. 6. WTO does not promote inequality and unemployment. 7. The WTO gives more power to small countries and does not make them powerless. 8. The WTO is not a platform to lobby for some favorable trading conditions. 9. Those who take part in WTO do this by their own interest not out of force. 10. The WTO is not against democracy.
The trade increases efficiency through specialization. The combinations of good which is not available because of constraint in production possibility curve can be now available to the consumers. One country can non make everything it wish to consume or can produce it with a higher opportunity cost. This is same as any individual who wish to become self-sufficient by producing for themselves all the things that they need and want. The benefits of this system are that we don't need to spend resources or money on the services and goods we would have bought otherwise. Another plus point is nobody has to specialize in any task to earn bread and butter, they can produce it themselves. However, this is not possible for everyone to produce everything they need or want. Instead it will be far more efficient to specialize at what they are good at and sell the goods or the service for money. It will be far more efficient to hire a professional for professional job and go to the market instead producing all the thing we need or want.
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