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    B1103003eco204sem3 2020 QUIZ

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    This document contains a student's responses to several questions. 1. The student agrees that equilibrium can exist in international collaboration as parties must compromise. Innovations also help sustain international markets by improving trade through technological advances and increased economic growth. Learning curves can explain how information spreads over time. 2. International trade has been impacted by COVID-19 through falling prices and disrupted supply chains. Keeping trade open is important, and trade has increased in medical supplies and e-commerce. However, per capita income alone cannot determine a country's development status. 3. The student describes models of comparative advantage by Ricardo and Heckscher-Ohlin, explaining patterns of international trade. Learning curves show that

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    B1103003eco204sem3 2020 QUIZ

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    This document contains a student's responses to several questions. 1. The student agrees that equilibrium can exist in international collaboration as parties must compromise. Innovations also help sustain international markets by improving trade through technological advances and increased economic growth. Learning curves can explain how information spreads over time. 2. International trade has been impacted by COVID-19 through falling prices and disrupted supply chains. Keeping trade open is important, and trade has increased in medical supplies and e-commerce. However, per capita income alone cannot determine a country's development status. 3. The student describes models of comparative advantage by Ricardo and Heckscher-Ohlin, explaining patterns of international trade. Learning curves show that

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    This document contains a student's responses to several questions. 1. The student agrees that equilibrium can exist in international collaboration as parties must compromise. Innovations also help sustain international markets by improving trade through technological advances and increased economic growth. Learning curves can explain how information spreads over time. 2. International trade has been impacted by COVID-19 through falling prices and disrupted supply chains. Keeping trade open is important, and trade has increased in medical supplies and e-commerce. However, per capita income alone cannot determine a country's development status. 3. The student describes models of comparative advantage by Ricardo and Heckscher-Ohlin, explaining patterns of international trade. Learning curves show that

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    54 views4 pages

    B1103003eco204sem3 2020 QUIZ

    Uploaded by

    WSLee
    This document contains a student's responses to several questions. 1. The student agrees that equilibrium can exist in international collaboration as parties must compromise. Innovations also help sustain international markets by improving trade through technological advances and increased economic growth. Learning curves can explain how information spreads over time. 2. International trade has been impacted by COVID-19 through falling prices and disrupted supply chains. Keeping trade open is important, and trade has increased in medical supplies and e-commerce. However, per capita income alone cannot determine a country's development status. 3. The student describes models of comparative advantage by Ricardo and Heckscher-Ohlin, explaining patterns of international trade. Learning curves show that

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    of 4

    Student ID: B1103003 email: b1103003@helplive.edu.

    my

    QUESTION 1
    a) Equilibrium can exist within the reality of international collaboration. This is due to
    the fact that in international collaboration in trade the demand and supply of goods and
    services in the economy shift. As a consequence, local markets respond, and prices
    change. This has an impact on households, both as consumers and as wage earners.
    The implication is that trade has an impact on everyone. It’s not the case that the
    effects are restricted to workers from industries in the trade sector; or to consumers who
    buy imported goods. The effect of trade extends to everyone because markets are
    interlinked, so imports and exports have knock-on effects on all prices in the economy,
    including those in non-traded sectors. In terms of equilibrium in international
    collaboration, each country may have its own unit of account and consequently the
    absolute level of money prices in terms of the token or counter money may be different in
    each country. But under pure competition the price ratios between internationally trad- ed
    commodities must be the same for all countries in the absence of transportation costs.
    It is agreeable that equilibrium can exist within international collaboration, as one
    party must give up something for another, this forms the basis of international
    collaboration.
    b) I agree that innovations will always be a good asset for maintaining the sustainability
    of international market, this is due to the fact that innovations will always improve
    international trade via few ways, Technological innovation is considered as a major
    source of economic growth.
    Economic growth refers to the increase in the inflation-adjusted market value of the
    goods and services produced by an economy over time. It is conventionally measured as
    the percent rate of increase in real gross domestic product, or real GDP. There’s generally
    two ways to increase the output of the economy: Increase the number of inputs that go to
    the productive process, come up with new ways to get more output from the same number
    of inputs. This will most certainly maintain the sustainability of international market as it
    will make sure all the countries involved will be improving their own production cost and
    quality.

    c) Learning curve is concept that graphically depicts the relationship between the cost
    and output over a defined period of time, normally to represent the repetitive task of an
    employee or worker. Therefore, it is agreeable that the nature and spread of info can be
    used to explained a classical learning curve.
    Student ID: B1103003 email: b1103003@helplive.edu.my

    Question 2

    a) The impacts of COVID-19 on international trade have been many and varied. We
    have seen falling commodity prices, reduced manufacturing output and disrupted operations
    in global value chains. Trade in services has been significantly affected.

    As many borders remain closed and safety controls delay the movement of goods,
    developing countries that are highly reliant on external markets are being hit particularly
    hard. Small countries with high levels of external debt and limited resources to sustain their
    economies are most at risk of a severe economic recession.

    Yet the COVID-19 emergency has shown the importance of keeping trade open in
    times of crisis. For example, cross-border trade has been instrumental in meeting the demand
    for COVID-19-related medical products on a global scale. International trade of items such as
    personal protective equipment and ventilators more than doubled in just a few months. The
    pandemic has also driven an increase in e-commerce, linking consumers to producers not
    only domestically but also across borders. Hence it is safe to say that there is a need for
    international collaboration or trade to occur within countries in the conditions of Covid-19 in
    order to sustain the economy of a country.

    b) Economic growth assesses the expansion of a country’s economy. This indicator


    estimates the value added in a country which is the total value of all goods and services
    produced in a country minus the value of the goods and services needed to produce them. It is
    common to divide this indicator by a country’s population to better gauge how productive
    and developed an economy is – the GDP/income per capita.  GDP as a measure of economic
    growth is partly because it is easier to quantify the production of goods and services than a
    multi-dimensional index can measure other welfare achievements. Precisely because of this,
    GDP is not, on its own, an adequate gauge of a country’s development. Development is a
    multi-dimensional concept, which includes not only an economic dimension, but also
    involves social, environmental, and emotional dimensions. Hence, it is disagreeable that
    income per person is enough to determine the status of country as the developed or
    developing.

    c) Ricardian Model

    The Ricardian model is a modification of Adam Smith’s absolute advantage theory.


    Adam Smith stated that countries could benefit from trade if they produce a specific good at a
    Student ID: B1103003 email: b1103003@helplive.edu.my

    lower cost in comparison to its foreign counterpart and then trade its own product with a
    product it cannot produce at lower cost. David Ricardo further fortified Smith’s absolute
    advantage theory by arguing that a country without absolute advantages in international trade
    could still benefit from trade but through comparative advantage.

    According to this model of comparative advantage, technology differentiates labor


    productivity. Ricardo states that labor is not able to produce comparative advantage without
    differences in technology among nations. Ricardo’s comparative advantage proves to be a
    profit-maximizing solution for capitalists because of infrastructures and goods requiring
    different factors of production. However, all nations will not see the need to trade with each
    other.

    Heckscher-Ohlin Model

    The Heckscher-Ohlin model is a mathematical model of international trade developed


    by Bertil Ohlin and Eli Heckscher. It’s based on David Ricardo’s theory of comparative
    advantage by forecasting patterns of production and commerce. It generally states that
    nations exporting products use their cheap and abundant factors of production and import
    products that consume scarce factors.

    Factors of production like capital and labor determine a state’s comparative


    advantage. Nations have comparative advantages in goods that need factors of production
    scarcely available locally because profits of goods depend on input costs. Goods requiring
    inputs that are locally available will be cheaper to produce than goods requiring inputs that
    are scarce. For instance, if country X’s capital and land are locally available, but labor is
    scarce, it will have a comparative advantage in goods requiring a lot of capital and land, but
    little labor.

    Learning Curve

    The learning curve is an important modern concept according to which cumulative


    experience in the production of a product over time increases efficiency in the use of inputs
    such as labour and raw materials and thereby lowers cost per unit of output. Thus, either with
    the increase in efficiency of resources or with saving in resources such as labour and raw
    materials, cost per unit of output declines. This learning curve effect mostly occurs in the
    reduction of labour requirements per unit of output.
    Student ID: B1103003 email: b1103003@helplive.edu.my

    In the context of international trade, the learning curve shows that unit cost is lower
    the greater the cumulative output of a country’s industry to date. • A country that has
    extensive experience in an industry (L) may have a lower unit cost than a country with little
    or no experience, even if that second country’s learning curve (L*) is lower— for example,
    because of lower wages

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