Question

With vast improvements in technology and innovative app developers, we're now more connected than we've ever been. This past weekend I used my Uber Eats app to have a person deliver food to me from my favorite restaurant, that was a form of trade. We typically think of trade on a grand scale involving countries, but what are some ways that you engage in trade in your personal life? Additionally, why do you think specialization is important and does it lead to an increase in trade? How does specialization affect comparative advantage for individuals (or countries)?

Answer 1

Trade is a part of each and everyone life. On daily basis people trade with others for something like we buy our day to day grocery which is one form of trade, we buy clothes which is also trading and many more

Countries trade with each other same way. If people trade with each other there is only benefit for those who are involved in trading but if countries trade both people and the economy will be benefitted. Trade will help the countries to capture new markets and also sell their countries goods in other countries at effective which will make them earn new markets and profits.

So countries should try to specialize in trading goods and services which they can produce cost effective as it will increase trade and also comparative advantage for them in trade.

When a country is having comparative advantage due to specialization in particular good or service than the country is having an advantage of producing a good at a low opportunity cost in the market which will make them to have a upper hand in market.

Trade is always beneficial to countries and also individuals for growth.