Reasons for trade

YI Qian Tang
Mind Map by YI Qian Tang, updated more than 1 year ago More Less
Jia Jun Neo
Created by Jia Jun Neo over 3 years ago
YI Qian Tang
Copied by YI Qian Tang over 3 years ago
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Mind Map on Reasons for trade, created by YI Qian Tang on 10/07/2018.

Resource summary

Reasons for trade
  1. DD-Side
    1. Diff in T&P
      1. Eg, preference towards Japanese cuisine → M of Salmon Sashimi
      2. ↑ Competitn
        1. Innovate & Improve quality of g&s
          1. ↑ Variety, quality and qty
          2. ↓ Px
        2. Engine for growth
          1. ↑ mkts, ↑ X → ↑AD
            1. ↑ I, ↑ RNY
              1. ↑ AS
                1. Tsf of tech → ↑ productive capacity
                  1. ↑ LRAS
                  2. ↑ Competn
                    1. ↑ R&D & Efficiency
                    2. Import cheaper factor input → ↓ COP
                      1. ↑ SRAS
                  3. CA Theory
                    1. Ability to produce gds @ a lower opp cost
                      1. Specialization of g&s they have CA in → exports them
                        1. ↑ O/p
                          1. Consume > PPC → ↑ Soc Welfare
                        2. EOS
                          1. Esp small dom mkts
                            1. IEOS & EEOS
                              1. Expand their scale or production
                                1. ↓ unit COP
                                  1. E.g socks industry in China (EEOS)
                              2. Gain CA with EOS
                              3. Acquired needed
                                1. Imports of Raw Materials
                                  1. Capital gds
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