investment tools economics global economic analysis

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1、六、InvestmentTools:Economics:GlobalEconomicAnalysis1.A:GainingfromInternationalTradea:Statetheconditionsunderwhichanationcangainfrominternationaltrade.Comparativeadvantageistheabilitytoproduceagoodataloweropportunitycostthanotherscanproduceit.Relativecostdeterm

2、inescomparativeadvantage.Whentradingpartnersspecializeinproducingproductsforwhichtheyhavecomparativeadvantage,costsareminimized,outputisgreater,andbothtradingpartnersbenefit. Absoluteadvantageisasituationinwhichanation,astheresultofitspreviousexperienceornatur

3、alendowments,canproducemoreoutputwiththesameresourcesthananothernation.Notethedifference:Absoluteadvantagereferstousingthefewestresourcestoproduceaproduct.Comparativeadvantagereferstothelowestopportunitycosttoproduceaproduct.Accordingtothelawofcomparativeadvan

4、tage,tradingpartnersarebothbetteroffiftheyspecializeintheproductionofgoodsforwhichtheyarethelow-opportunitycostproducerandtradeforthosegoodsforwhichtheyarethehigh-opportunitycostproducer.Howtradeexpandsconsumptionpossibilities:Acountrygainsfrominternationaltra

5、dewhenitexportsthosegoodsforwhichithasacomparativeadvantageandimportsthosegoodsforwhichitdoesnot.Toseethismoreclearly,supposethatwecanproducewheatat$2perbushel.Iftheproductioncostis$3inallothernations,itistoouradvantagetoproducemorewheatandsellitontheworldmark

6、et.Additionalconsiderationsoninternationaltrade:1.Itallowsfirmstorealizeeconomiesofscale.2.Itbenefitsdomesticconsumersbyallowingthemtopurchasefromlargescaleproducersabroad.3.Itpromotescompetitionandallowsconsumerstopurchaseawidervarietyofgoods.b:Discusstheeffe

7、ctsofinternationaltradeondomesticsupplyanddemand.AssumetheU.S.hasacomparativeadvantageintheproductionofProductL.Thefollowinggraphindicatesthatwhentheworldpriceisallowedtoprevailinthedomesticmarket,thepriceandquantitysuppliedofProductLarebothhigher.Asaresult,do

8、mesticconsumersarelosersbecauseofthehigherpricetheymustpay,anddomesticproducersarewinnersbecauseofthehigherpricetheyreceiveandhigherquantitytheysell.Howeverthereisasecondaryeffect.