International Trade and Trade Restrictions

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International Trade and Trade Restrictions

International Trade and Trade Restrictions
International trade increases the number of goods that domestic consumers can choose from, decreases the cost of those goods through increased competition, and allows domestic industries to ship their products abroad. While all of these seem beneficial, free trade is not widely accepted as completely beneficial to all parties and trade restrictions are applied. Trade restrictions can be in the form of tariffs, which are taxes on imports; quotas, which are limits on the quantity of a particular good that can be imported or exported; or other trade restrictions. International trade efficiencies, trade restrictions, and the consequences of these restrictions will be discussed further. World trade offers many advantages to the trading countries: access to markets around the world, lower cost through economies of scale, the opportunity to utilize abundant resources, better access to information about markets and technology, improved quality honed by competitive pressure, and lower prices for consumers (McEachern, 2012, p. 733). Comparative advantage, specialization, and trade allow people to use their scarce resources most efficiently to satisfy their unlimited wants. Comparative Advantage is the ability to make something at a lower opportunity cost than other producers face (McEachern, 2012, p. 32).  The ability to make a good at a lower opportunity cost gives that individual, firm, region, or country a comparative advantage. Even if a country has absolute advantage in all goods, they should specialize in producing the goods in which it has a comparative advantage. If each country specializes and trades according to the law of comparative advantage, everyone would benefit from greater consumption possibilities. McEachern provides three reasons for international specialization: countries having different resource endowments, greater economies of scale can be achieved...
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