Trade In The Mercantile Period (Essay Sample)

A Discussion On Trade In The Mercantile Period Student's Name Professor's Name History And Anthropology January 09, 2019 1. The Absolute Advantage Theory defines a country as having a trade advantage if it is able to produce goods at a lower cost (Agarwal, 2018). Additionally, this theory defines a country as having a trade advantage if such country is able to produce goods utilizing fewer resources as compared to a different country (Agarwal, 2018). Meanwhile, The Comparative Advantage Theory defines that a country should still be able to get a trade advantage if its people are able to effectively produce goods and services in which they are not competent in producing, as compared to a different country whose people are competent in producing similar goods and services (Landsburg, 2018). 2. These two views on trade are similar to each other. If the people of a particular country is able to produce goods at a lower cost and utilize fewer resources in producing such goods, then these people may not be really competent in producing the said goods. Of course, in order for goods and services produced to be of high quality standard, many resources need to be utilized during production. Common sense would tell anybody that utilization of greater resources during goods production should likely mean greater amount of money involved in the cost of production. 3. The concept of opportunity cost factors into the comparative advantage theory by means of the risk a particular country poses on itself by having its people produce goods and services these people are not skilled in producing. The people of such country may not able to guarantee that they are always able to produce high quality standards goods and services. This is because they are not skilled in producing such goods and services. 4. In the last two centuries, it has become quite difficult to be able to produce goods and services at a lower cost, without utilizing a lot of resources. Many countries do not want to resort to skipping the production of certain goods and services if they are not able to produce such at a lower cost and fewer utilization of resources. Because of this, many countries have resorted to risking having its people produce even goods and services their people are not skilled in producing, with the hopes that despite such incompetency, their people would still be able to produce high quality products and other outputs. Having said this, comparative advantage has become the fundamental and accepted theory of trade. Examples of this situat...