Why would a country such as the United States, which can presumably produce everything it needs itself, choose to trade with other nations?© BrainMass Inc. brainmass.com October 17, 2018, 12:14 pm ad1c9bdddf
In general, countries trade with each other because of an economic concept known as comparative advantage. According to the law of comparative advantage, a country should focus on (specialize) in producing and exporting resources which it can produce at the least opportunity cost and import the resources for which it is a high cost-producer.
To further understand this concept, let me explain what opportunity cost means. Opportunity cost can be remembered as what you give up/ what you gain. It is simply the cost of something forgone ...
Gains in trade through comparative advantage. Why nations trade with each other.
I need help with the following, a 700 - 1,050-word paper in which I compare and contrast the following major trade theories:
? Absolute advantage.
? Comparative advantage.
? Heckscher-Ohlin factor endowment
Then, select one of the major trade theories and answer the following question: What cultural, physical, economical, financial, and political impediments might prevent the successful application of your selected trade theory? Be sure to cite your references in your paper.