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Critical Thinking Assignment - Report

   

Added on  2020-07-23

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CRITICAL THINKING

Table of ContentsCritical Thinking..............................................................................................................................1Theory of comparative advantages.............................................................................................1References........................................................................................................................................4

Critical ThinkingComparative advantage is the economical law that refers to the economic personnel ability toproduce goods and services at the lowest opening cost than any other economic personnel. In theterms of Schumacher and Palley comparative advantage is the term related to widespreadconcern of all over the world trade liberalisations. This includes the stability of capital andlabour, balanced trade, that are included or responsible for comparative productivity advantagethat result in price advantage, providing full employment. These advantages are stated inSchumacher theory of comparative advantage whereas, Palley new trade theory is concerned forinternational trades future impact on the national income and states that how the globalisationcan have its affect on the size and distribution of profits through trade in different countries.Smiths international trade delivers same cause for all kind of trade, he states that trade has itsmotive and when people trade with each other they have their own interest to gain benefits fromit otherwise would not pursue it. Theory of comparative advantagesAccording to Schumacher, this theory states for the free international trade betweendifferent countries. It dominates international economics and shows why free trade is beneficialfor different nations and for the whole world as well and how this free trade benefits to all. Thistheory also concerns in favour of the poor countries to open markets to raise their standards ofliving and join free trade authority. It is believed that through this process of trade relaxation willhelp in maximising the global economic conditions from the theory of comparative advantage. Inthe words of Schumacher this theory support and lies on the assumption that capital and labourare not exchanged between the nations, as this theory is different from the assumption ofdomestic trade(Schumacher, 2013). This theory implements that through this trading process itwill be advantageous for both the countries, though one nation will have production rate lower inall goods and other will produce all the goods efficiently. In the study of Schumacher he statesthat not only free trade will be beneficial for the nations, but it will be advantageous for thenations as free trade leads to specialisation unintentionally accordance to comparativeadvantages. This theory is adopted by neoclassical and modern formulation of free tradelegislatives, Neoclassical theory is completely based on marginal analysis and this economicconditions determines that free international trade benefits to all the nations participating in theprocess. This process benefits in the terms of comparative advantages by determining that if1

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