Question

This is for International economics, 3-5 sentences per questions should be enough. Please answer every question. I don’t need the ones that are already on the Internet.

1. Explain the law of Comparative Advantage.

2. Describe some of the differences between tariffs and quotas?

3. What are some major trade problems faced by developing nations?

Answer 1

1) Law of Comparative Advantage: is an economic law or principle that states under free trade, an economic actor will produce more of and consume less of a product or services for which they hold comparative advantage; thus occurs when a country produces a product or service for a lower opportunity cost in comparison to other countries

2)

--Tariffs refer to the taxes imposed by the government of a country on import and export goods, conversely quota refers to the imposed limitation by the government on the quantity of product that can be either exported or imported.
-- Tariff revenue brings gains to the government; on contrary the gains received by quotas are beneficial for the traders

-- Tariffs earn revenue for the government and raises the country's GDP and quotas are imposed on the number of the products traded and not the amount paid; and consequently neutralizes the GDP.

3) The major challenges that are faced by developing countries when it comes to international trade includes trade barriers, depleting foreign exchange reserve and import cover, export instability and international commodity agreements