Cite three important reasons why nations trade and what are the major imports and exports of...

Cite three important reasons why nations trade and what are the major imports and exports of the United States?

Solutions

Expert Solution

The reasons are given below:

a) ECONOMIES OF SCALE - Economies of scale refer to the cost advantage experienced by a firm when it increases its level of output.When a country produces on a large scale in order to satisfy domestic as well as foreign demand, it may be able to gain more economies of scale. This will lead to lower average costs and benefit consumers through lower prices.

b) FACILITATE ECONOMIC DEVELOPMENT- Imports facilitate economic development of a nation. This is because with the import of capital goods and technology, a country can generate growth in all sectors of the economy, i.e. agriculture, industry and service sector.

c) HELPS IN INCREASING COMPETITION- Higher global competition may help to spur domestic productivity improvements and give domestic firms a better incentive to innovate and improve their products. This will benefit consumers.

Major exports of the US are Refined petroleum,cars,planes,computers.

Major imports of the US are Cars,crude petroleum,computers,vehicle parts.

Rahul Sunny answered 1 year ago

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