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A theory of international trade is that nation's trade based on demand rather than cost/supply. Discuss...

A theory of international trade is that nation's trade based on demand rather than cost/supply. Discuss this theory, apply it to at least two cases and mention its chief advocates.

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Answer #1

There are many factors determines the international trade both supply and demand-side factors determine the international trade.

Demand-side factors such as consumers taste and preference one such factor greatly influence the demand for the domestic goods example Automobile industry consumer might prefer foreign manufacture than domestic manufacturer it because of consumer taste and preference consumer might feel foreign manufactured goods is quality is good.

Thus these phycological factors increase the demand for the foreign automobile manufacturers sells more goods.

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