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International Trade Simulation and Report

Absolute advantage

Absolute advantage is the ability of a certain economic unit like a particular country to produce a product in high quantities with a lower cost of production than some other unit. This is done when the units are compared. This is done to calculate the efficiencies of production.
Comparative advantage is done to have the trades and specialization determined. These theories are for international trade concepts.
Issues that surround the international trade
Some of the basic issues that are involved in the international trade arena range from some areas. In the theory of comparative advantage, there can be a trade between two countries on certain goods. In such a case both of them can benefit from having a specialty in the goods with comparative advantage and then proceed by trading in them (Ray, 1998). With this happening, there are is more efficient than one country has all the goods.
Another issue is the Heckscher Ohlin model which deals with gains and losses. In this, two concepts are involved, that one of intensity and that of abundance. In case two goods use two production inputs that are labor and capital, the ratios of production will be different for both. I say a good A uses more of a ratio B to C, then the good is B sensitive. In this case it is good to note the relativity of the intensity. If the endowment of a country with B is higher than C, it therefore holds that the country is B abundant.
On the other hand, if a country has a greater advantage in technology than one country, then it means that the country has a comparative advantage (Krugman, 2006). Other issues which might arise are the interventions by the government which is led by historical and expectation roles. Economies that do have very much equilibrium can decide to surpass one of them and hold it in that place.

Role of the summary assessment

Summary assessment is a procedure where a court on having decided which party is liable to make some costs makes an immediate assessment on the costs to be paid under such an order rather than having costs that are fixed or maybe detailed assessments (Ray, 1998).
In section 3.2, summary assessment becomes important when a fast-track trial is concluded or when a hearing is concluded. In section 14.1, hearings of summary assessment are when the hearings have contested directions or there is a dismissal from the court of appeal, or there is an application for appeal permission. Once this is made, the assessment can take place which is done by the DPR.
If a certain party has a reason for disputes, then the summary assessment can take place. It is also not possible to carry out the assessment when the time is not sufficient. It is appropriate to have the assessment take place if there is an application.
Effects Of Government Policy On Economic Behavior
Government policies have both positive and negative economic behaviors. Some good example is the introduction of antitrust laws, regulations for banking, insurance policies and some transfer programs. On qualitative basis, there are similar effects when comparison is made to the rural areas and the urban areas. Tax rates and credits affect the income that operates government programs in such areas. The banking regulations have made the collapse of major banks and have also led to the economic breakdown that happened in the recent past.
Taxpayers usually respond to government policies. These responses, on the other hand, can then inform the government on policy design.

The amplified fluidity of most capital markets more often than not call for innovative understanding to force and of course formulation of the taxation capital income which is nearly economic difficulties of income and the tax reforms reduce the income. Research has capitalized in measuring how the agents respond to taxation of the income, how other systems can be gotten to make taxation easier. This has helped to assist the government in decision-making.

World trade organization

This is an organization that is responsible for dealing with trade rules between countries at global levels or at times near such levels. At the core of this organization are agreements that belong to the DTO and are signed by the trading nations of the world. This organization above the liberalization of trade maintains trade barriers like consumer protection, environmental protection and prevention of diseases.

Being a rule-based organization; one of the trade topics that the organization deals with is the fairness of the markets to the farmers. The first GATT had loopholes in it like when it permitted countries to use non-tariff measures like quotas on imports and subsidization. This distorted agriculture to a very large extent (Krugman, 2006). There was no importance of using export subsidies to those goods that were of industrial nature.

The first multilateral agreement to try to save this was the one in Uruguay.

This was done in 6 years since 1995. In this round, there was an agreement on the continuation of reforms through negotiations. It came to be launched during the year 2000 after having met the requirements of the Agriculture Agreement.

These agreements had more rules and commitments owing to the fact that they had a focus on reformation on trade and have improving policies on the market. This had application on market access which had restrictions on the imports. Domestic support is oriented to programs and subsidies including other programs. These include those that guarantee and raise prices for farm gates and income to the farmers. Some others are export subsidies and methods that artificially make exports competitive.

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Looking at the World Trade website, it is wise to conclude that the organization is more oriented towards the reformation of the world trade towards the betterment of all the trade organizations. The trade organizations have thus become more reformed and there is fairness in the market.


  1. Krugman, Paul & Obstfeld, Maurice. (2006), International economics: theory and policy, Addison-Wesley: Boston MA.
  2. Debraj, Ray.(1998). Development Economic, Princeton University Press: Princeton

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