COMMERCE 1B03 Chapter Notes - Chapter 9: General Agreement On Tariffs And Trade, Opportunity Cost, World Trade Organization

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1B03
• Professor: Rita Cossa

Document Summary

Comparative advantage a country produces a good at a lower opportunity cost than other countries. Gains can be made from trade if countries with comparative advantages trade with each other. If domestic price (pd) < world price (pw), country has a comparative advantage in the good and exports. If domestic price (pd) > world price (pw), world has a comparative advantage in the good and we import. Price taker small countries have no impact on the. When small countries engage in free trade, pw is the only relevant price to them. Domestic sellers wouldn"t accept any less than. Domestic buyers wouldn"t pay any more than. Producers achieve lower costs by mass producing for a large market. Market power of domestic firms may decrease due to competition from abroad. Enhances flow of ideas and technology, enhancing the world. Losses are often highly concentrated in a small group of people, who feel them acutely.