international trade

Question 1

advantages of international trade

Answer 1

• an extension of specialisation rom the individual and regional scales within a country
• sepcialisation: resources are not evenly distributed through the world
• labour: specialist skills
• natural advantageL minerals

Question 2

assumptions

Answer 2

• world contains 2 countries
• production takes place in the 2 units which are homogeneous
• all factors of production are mobile
• no barrier to entry
• transport costs are free

Question 3

law of comparative costs

Answer 3

nations will face trade when

• they have different opportunity costs and opportunity cost ratios
• the international terms of trade lie within the limits set by the domestic opportunity cost ratios