Question

Do you think that international trade negotiations are important for agricultural policies?

Answer 1

Yes.

The theory of comparative advantage can be a good explanation. The theory of comparative advantage states that a nation should import goods which has a relatively higher opportunity cost to produce and in turn export the good which it can produce at a lower opportunity cost .

This helps maximise the total utility for both nations, as both nations are better off trading than producing all the goods on its own.

International trade negotiations should follow the concepts of comparative advantage , which can actually be quite beneficial and helps to negotiate deals.

This inturn helps in decision making in the current agricultural policies and shiting to a new one. When a country specialises in the good with a relatively lower opportunity cost, this also helps a nation reach economies of scale which is a deed bonus.

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