International Trade and Comparative Advantage

The video discusses the importance of international trade, highlighting how countries benefit from trading goods and services. It explains the concept of comparative advantage, where countries specialize in producing goods they are more efficient at, leading to a global production hub. This specialization allows for better resource allocation and increased efficiency. The video also covers the benefits of economies of scale, where mass production leads to cost savings. Overall, international trade enhances global efficiency and resource utilization.

Why do countries engage in international trade?

• To become self-sufficient

• To benefit from interactions with other countries

• To reduce the variety of goods available

• To avoid specialization

What is one of the main benefits of international trade?

• Increased self-sufficiency

• Reduced global interactions

• Access to a wider variety of goods

• Decreased quality of goods

What does the principle of comparative advantage allow countries to do?

• Produce everything they need

• Focus on producing goods they are less efficient at

• Specialize in goods they produce more efficiently

• Avoid international trade

How does specialization affect global production?

• It reduces the efficiency of resource use

• It creates a global production hub

• It limits the variety of goods produced

• It increases the need for self-sufficiency

What happens when countries specialize in production?

• They focus on goods they are less efficient at

• They produce a wider variety of goods

• They become more self-sufficient

• They use resources more efficiently

What is the main advantage of the law of comparative advantage?

• It reduces global trade

• It allows for more efficient resource use

• It increases the need for self-sufficiency

• It limits the variety of goods produced

What is a key advantage of mass production?

• Increased production costs

• Decreased quality of goods

• Cost savings through economies of scale

• Reduced global trade

What is the role of trade deals in international trade?

• To reduce the variety of goods available

• To foster more cross-border transactions

• To limit cross-border transactions

• To increase self-sufficiency

How do economies of scale benefit firms?

• By providing cost savings through bulk purchases

• By reducing the quality of goods

• By limiting international trade

• By increasing production costs

What is the impact of international trade on global efficiency?

• It decreases global efficiency

• It limits the variety of goods available

• It has no impact on global efficiency

• It increases global efficiency