Microeconomics: Can someone answer this question in discussion for for me?

You need to read the Ricardo model and the H-O model carefully and I think this question will answer itself for you.

Edit: Actually, it seems like you're in a lower level econ class. Probably just looking at Adam Smith's argument vs Mercantilists; i.e., whether or not trade is of a zero-sum game, would be enough to answer this question for you.

 

The consumers get the goods at cheaper price from other countries, the producers lose more because



In the sense, they go out of business

 

yes they go out to business, and the capital they were expending finds a better use

 

Correction: it should theoretically find a better use.

In reality, it's hoarded in the Cayman Islands.

 

Write your own research paper, brah.

 

Went back to my books from college and found out that it's my life starring michael keaton and nicole kidman.

 

My serious answer is based on the idea countries should focus on producing and trading their comparative advantage goods. When they do both countries win, because the markets increase. Global markets aren't zero sum...they can grow via trade.

Since your scenario is one-sided, Country A who is at a comparative disadvantage unlocks more consumers/buyers of the good when Country B provides the goods at a lower price, so consumers of Country A gain more as the market increases than the producers of Country A lose (since they can't reap the benefit of new buyers who entered the market due to the lower price).

I think the teaching point that your professor is trying to make is the market is increasing to the benefit of only one country and consumer base -- the gain by Country B producers is benefiting a larger consumer base in Country A...and the gain is out-performing the loss in Country A's producers.

If Country A in turn trades their goods in which they have a comparative adv to Country B, Country B's market for the goods increases as more consumers choose to buy at the lower price... So, when both countries have comparative advantages and then trade, the markets of both countries increase...more than they lost by not trading.

 

If you want, you can email me through the board and I can send you some class material that I have to answer your question.

Reposting this. Basically sums it up. Although Adam Smith is boring, just get a google summary out there.

 

Come on man. This has to be one simple Google away.

Sauce: I have a bachelor's economics degree.

 

The answer is fair trade agreements, secure borders, congressional term limits, and a loaf of bread on every table with a chicken in every oven.

Make a America GREAT Again!

 

... but by the time the grand children get to it there ain't much left.

 

The problem with this is when Country B is too poor to buy the goods from Country A. Then i think Country B gains more than Country A. Basically a rich country carrying a poor country tilts the balance even though the total pie still increases. Imagine this, if Mexico were as wealthy as Canada, the economic benefit of NAFTA would probably to great enough to be felt by average citizens in border states. Or look at the EU, do they really benefit from having poor countries like Greece and Italy and Portugal in their union?

 

Aren't you way off topic? Maybe clarify more.

The topic is when both Country A and B are producing the good and have established buyers. Saying Country B is too poor to buy is not within the parameters of the test question, as they are already producing and buying, but just not as efficiently as A, thus they are at a "comparative disadvantage" -- see first sentence in OP

 

Local consumer advantage : has to be limited between :

a minimum of 1 or a maximum of 2 of the following : [Price,Quality,convenience]

.
so logically a local producer push the price down ,improve support/service ,while working on quality to stay in business to "break even" situation.

Producers with advantage to certain good do not have to work on the previous so called "impossible triangle " , they have two different segments of consumers likely with higher margins

 

I'd think this would be more of a macroeconomics questions. Secondly, do you own work. Your excuses are weak. It's easy to get all the info you need readily without blatantly asking.

 

You must be fun at parties. Jees, lighten up Francis. Not everybody gets it first time.

 

Didn't get a BA. Read a lot of Krugman and economist tho.

Look up when countries horde capital surpluses.