Question

Establish the differences between mercantilism, absolute advantage, comparative advantage, heckscher-ohlin theory, monopoly, and oligopoly.

Answer 1

Two significant ideas in economics and international trade are absolute advantage and comparative advantage. They have a major impact on how and why countries and companies are devoting resources to the manufacturing of specific products.

Absolute advantage is described in isolation as a situation where one organization can produce a product at a higher quality and a quicker rate for a greater profit than another competing company or nation can achieve. Comparative advantage varies in that when selecting to produce various kinds of products with restricted resources, it takes into account the opportunity costs involved.

During the mercantilist era, there was both more frequent and more widespread military conflict between nation-states than at any other moment in history. The primary protagonists ' armies and navies were no longer temporary forces raised to tackle a particular danger or goal, but full-time professional forces. The main financial goal of each government was to command a adequate amount of hard currency to sustain a army that would prevent attacks from other nations and assist its own development of territory.

Mercantilism, also known as "commercialism," is a system in which a nation tries to accumulate wealth through trade with other nations, exporting more than it imports, and expanding gold and precious metals shops.

The Heckscher-Ohlin theorem says that the capital-intensive good will be exported by a capital-abundant nation. Likewise, the labor-abundant nation is going to export the labor-intensive good. Every nation exports the good it generates comparatively better than the other nation. The benefit of a country in manufacturing in this model stems exclusively from its relative abundance of factors.

Monopoly and oligopoly are structures of the economic market where market competition is imperfect. A monopoly includes a single company producing goods without a near replacement, while an oligopoly market has a tiny amount of comparatively big companies producing comparable but slightly distinct products. In both instances, other companies have important obstacles to entry.

A monopoly occurs in fields where the only (or dominant) force selling a product or service in an sector is one corporation, firm or entity. This provides the entity enough authority to stay away from the marketplace other rivals. This may be because of the industry's requirement for technology, high capital, government regulation, patents, and/or high distribution overheads.

In an oligopoly, the market is controlled by a group of smaller firms— usually two or more. None of them, however, can prevent others from having important impact in the sector, and they can sell slightly distinct products.

Due to the existence of competition, prices in this industry are moderate. The others will do the same to stay competitive when one company sets a cost. But if one firm drops its price for consumers, the others typically follow suit. Prices are usually higher in an oligopoly than they would be in perfect competition.