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E1.A detailed explanation of how international trade leads to the benefits andcosts identified usi

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E1. A detailed explanation of how international trade leads to the benefits and costs identified using relevant theories for consumer, businesses and countries. International trade is where international businesses import and export their products to other countries. International trade is the exchange of products and services between countries. It is about the movement of goods, capital, services, technology and employees internationally. The three basic theories in international trade are: 1. Free trade 2. Comparative advantage 3. Economies of scale Free trade Free trade is where you trade with any country freely without any restrictions or taxes on imports. This means consumers can buy cheaper and better quality products because there has not been any tax put on the product. For example if I wanted to buy a new car and there was a tax of �10,000 on the car then it would be less likely for me to buy the car because I could a get a cheaper on elsewhere that has been imported into the country because of free trade. Comparative advantage Comparative advantage is the understanding that countries can benefit from specialising in producing goods in which there relatively more efficient. For example countries that find it easier to get raw materials will have a comparative advantage over other countries. ...read more.


The business could specialise is a good or service. For example Chinese wholesalers could specialise selling Chinese products that is only available in china. Free trade benefits this because they would not have to pay a lot of money to import these products. Countries Costs Can cause inflation to rise because of tariffs and domestic producers putting up their prices to match. Benefits Increases revenue from duties and tariffs. Improves bargaining power in international relations. Allows free trade barriers between countries, cuts down existing barriers, allows development of global markets and provides opportunity with U.K firms about free trade agreement. Comparative Advantage Consumers Costs The cost of a comparative advantage is that the company might be making a product that consumers don't want to buy. Benefits They have the choice of the best-priced goods from the domestic or import market. Businesses Costs Other firms can have the comparative advantage over others because they may be able to specialise in products that other firms cannot. This is also good for business so that they can open other firms in other countries who do not have the same type of product in the countries that they open the businesses in. ...read more.


There will be many people in the business making each section work for the whole business to succeed. * Bulk buying economies They can discuss on discuss discounts on products and raw materials for the company. * Technical economies They can afford to buy expensive machinery with the latest technology. * Managerial economies Having special managers for each section of the business because company is big, if the company were small then you would do all the work. * Financial economies Businesses have efficient use of their resources. They get debts quickly therefore making effective use of trade credit. By doing so they can invest in different areas of the business, so in the long run this is making their money work for them. * Marketing economies If the company is big they can afford to spend more on their advertising, so their products will be more noticed than others. They can easily afford to use multi media promotion such as radio, magazines, newspapers ECT. Countries Costs If a country produces a product that other countries don't buy much of, they could be putting up costs, because they would be spending money in the production. Benefits The more businesses in one area can bring support businesses. Joelle Eyeson Q27479 ...read more.

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