Benefits of Trade

• Lower Price: Consumers able to buy less expensive products, raw materials. Lower prices because of acess to natural resources, difference in quantity and quality of FOS between countries, capital, Technology > comparative advantage
• Greater Choice:
• Difference in resources: Cpuntries without access to natural resources/ capital can aquire for domestic production.
• Economies of scale: Interantional market > size of market increases> demand increases> scale of production increase> econommies of sclae> efficient production> lower prices> export competitiveness. (scope for division of labour)
• Increase domestic production due to specialisation based on factor endowmnet>comparative advantage> cost advantage> produce more goods
• Increased competition: Foreign competition> greater efficiency> lower prices> more choice> utility
• Efficient global allocation of resources: Coumntries focus on what they produce best> comparar=tive advantage> cost advantage and effieincy> global output increase
• Foreign exchnage: (doubt)

Absolute advantage

A country is said to have absolute advantage in the proudctuion of a good if it can produce it using fewer reources thn other countries