Week 1 Forum International Trade
International trade refers to the exchange of goods and services between the two countries. The concept of comparative advantage mainly brings this exchange. Each country specializes in producing products and services in which they have a comparative advantage. International trade has a direct impact on me. I am a daily user of imported rice from Japan to the United States. I prefer Japanese rice over the locals due to its high quality. The United States, therefore, import a large amount of Japanese rice due to the high demand.
When the government has imported less rice in a given year, the negative impact brought by this affects me directly. Less importation of this product fails to march the high demand in the country and thereby forcing the sellers to hike its price. The increased rate means that I have to pay more per unit of rice (Fotolia,2016). Further, this shortage affects the cost of the local rice since it is the only alternative. Local producers take advantage of the increased demand to hike the price of their rice.
When the country has imported more rice from Japan, its effect on me is positive. This is because the supply exceeds the demand for the product, and therefore the sellers are forced to sell it cheaply. Similarly, the local rice producers are forced to reduce their prices. All these favors the consumers positively since they pay less for more.
Similarly, the importation of Japanese rice harms other complementary products that I consume. For instance, rice is commonly consumed together with meat. When the country has imported a lot of Japanese rice, the demand for meat increases, and therefore the meat sellers are compelled to increase the meat prices. As the cost of meat rises, I pay more for less.
Reference
Fotolia.com, (2016, August 8).5 Ways International Trade Affects Your Household
.https://tntribune.com/community/global/5-ways-international-trade-affects-household/