Absolute and Comparative Advantage Essay

Topics: International trade, Currency, United States dollar Pages: 1 (358 words) Published: December 12, 2010
Absolute and Comparative Advantage
The fact is as a country controls a huge part or benefit to other countries, this gives them the information that a country is producing a product with fewer resources. A country producing more products, have more ability, and knowledge to produce these particular products. Bad results should be the big concern and not the obstruction for the countries to create or do trade arrangements. The fact is as a country has a comparative advantage when the country creates a certain product at a low price. Comparing the opportunity rates of the different countries, he or she can better evaluate the comparative advantage for each country. When he or she can discover the strengths and weaknesses of a country and whether or not he or she are a better suite to do one job or the other in relations of lower opportunity rates, in creating a product should focus on that particular produce. Maximization of all countries will occur when he or she can figure out the advantages and disadvantages they have over other countries and discover the big source of their strength and weakness. Influences Affecting Foreign Exchange Rates

All countries have different currencies because of this trade would have to be in two different ways according to that countries currency. The effect of the exchange of foreign prices is the worldwide rates put on products for the entire world. The universal rates of specific products is put in calculation as the cost of products to import equal to the rate of foreign products multiplied by the dollar of foreign currency. The calculations can suggest that when the exchange cost shift, this suggests that a shift in universal or global cost of products sent to import and export. The two different exchange rates are depreciation and appreciation. The depreciation of currency implies that the lowering in worth of the currency equal to different countries. The appreciation currency is the worth of a specific...
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