Economics for Managers: International Trade and Domestic Market Impact

This essay examines the effects of international trade on domestic markets, focusing on both import and export goods. It analyzes how international trade influences the supply and demand, competitiveness, and equilibrium price and quantity within these markets. The report also discusses the impact of trade on domestic monopolies and the application of the FIFO (First-In, First-Out) method in asset management and inventory valuation. Furthermore, it incorporates concepts of game theory to international trade and tariffs. It sets up two payoff matrices, one harmful to both countries and one beneficial to the United States, evaluating them from a consumer perspective using current actions by each country. The essay concludes by highlighting the importance of understanding these dynamics for effective economic management.

Economics for Managers Unit
IV journal and Essay

Table of Contents
Unit IV essay...................................................................................................................................2
Conclusion.......................................................................................................................................3
References........................................................................................................................................4
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Unit IV essay
International trade have a greater effect on the domestic market it also impacts the import and
export of goods.
Impact for importer
Supply and demand for the particular goods
Tariff can increase the prices of goods which are being imported because whenever the price
increased then more domestic companies try to produce the goods (Timini, 2019). Demand for
the products get increased it is the duty of supplier to supply of goods and fulfill the demand.
Competitiveness of goods
It can increase the competitiveness of goods because consumers can buy good from different
companies at affordable prices. So the overall competitive among will get high. As international
trade permit countries to expand then market and sell their goods and services to other market of
different countries therefore the market becomes more competitive and it affects the prices of
goods as well.
Change affects the competitiveness
Changes will affect the competitiveness this will decrease the demand and equilibrium prices to
fall. In result the quantity supply will decrease.
For exporter
Supply or demand of goods
It can provide some benefits to the exporter because if the demands of goods get
increases in the international market then they will get more chance to supply the goods for that
exporters can fulfil the demand.
But due to tariff the prices of the goods can get infected and consumer gets ample of
choices as well Gaurav, S. (2021).Apart from this suppliers may face difficulties in the pricing
strategy as well because when consumer get lots of choices than they want to buy those products
which are high in quality but cheap in prices.
Competitiveness of goods in the market
Competitiveness of the goods will get decreases because due to the imposition of tariff,
suppliers of other countries will not supply the goods due to the barrier of tariff hands the
competitiveness in the domestic market will get increase. By imposing tariff government wants
to earn high income on the other hand it becomes difficult for the organisations to deal in the
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market as they need to bear high cost of tariff. Apart from this to draw the attention of new
customer they organisation need to give them more discounts and offer then only, new
companies can give tough competition to the existing once and increase their market share.
Changes in competitiveness affect equilibrium price and quantity
If any kind of change occurs in the competitiveness then it will definitely impact the prices and
quantity (Kinzius and et.al 2019). If the prices of the products and services go down then the
demand get increases in the market on the opposite if the prices of the products that increase then
the demand also get decreases. Therefore suppliers have to maintain the price as well as quantity.
Apart from this it is very important for the perspective of suppliers that they must fulfil the
market demand then only they can earn higher profit and good will as well. On the other hand it
is very necessary for the new entrants that they must provide high quality products at affordable
prices to their customers.
FIFO
FIFO states for first in first out it is an asset management and a valuation method. Through
which all those assets which is purchased earlier they will get sold out first. This method is an
important part of accounting. This method follows some assumptions as well. All this
assumptions closely get matched with the real flow of goods and therefore this method is
considered as the correct theoretical inventory valuation. Each and every business follows this
method as it provides accurate and correct information. As per this method those goods which
are purchased at the earliest will get removed at first so that organisation does not have to bear
unnecessary cost of warehouses to keep the stock. One of the biggest advantages of FIFO
method is that it is easy to use and apply. By applying this method no manipulation is possible.
Conclusion
From the above report it has been concluded that this report provides the impact of Game Theory
and various payoff matrix on different countries. This report also provides information about the
effect of International Trade on different markets.
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References
Books and Journals
Gaurav, S. (2021). Dynamic Inconsistency and Incentive Design: Insights from Behavioural
Economics for HR Managers. NHRD Network Journal, 14(2), 193-205.
Timini, J. and Conesa, M., 2019. Chinese exports and non-tariff measures. Journal of Economic
Integration.34(2). pp.327-345.
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