Question

2-One of the Principles of economics “Trade Can Make Everyone Better Off.” Based on your understanding of this principle, first, explain the fundamental principles of the trade between the two countries. Today we can see that some countries started to impose some restrictions on the flow of goods and services, do you think these practices contradict the principle? Why?

Answer 1

The fundamental principles of trade between two nations is that the nations involved in trade must get any benefit out of it. Secondly the goods and services that are rare in some nations must be available to all trading partners. And thirdly there shouldn't be barriers to trade.

If there are some factors which are scars to some nations and abundant in other, then by specialisation in that product and trading with other nations will benefit all, rather than producing everything within a country.

There are some countries which are putting restrictions on trade and this might be because they want to protect there own products from foreign competition. For example india produces plastic dolls in its country, they also import dalls from china. But as Chinese products are really cheap people will make demand for more Chinese products here the dall manufacturers of India will suffer a lot. So to protect there own nations products sometimes nations put some restriction. These practices does not violate the principal of trade because generally countries get into trade to benefit from it, but if there own industries are making loss then Puting restriction is the best option.