Trade

Trade is one of the most essential topics of economics because it branches into so many other areas and contributes to a country's worth. People trade because they want to acquire something better than what they have or get rid of something that they don't think has value. Some countries have free trade which means it is not taxed or regulated by the government. Protectionism is the name for countries who trade with government regulation. Embargo's are when two countries refuse trade with one another.

There are many advantages to trade. An absolute advantage is when one person or country has the ability to produce more units of a good than another using the same resources. A comparative advantage is when there is a country with the ability to produce a good or service at a lower opportunity cost than another. When a certain business, person, or country has an advantage, others are more likely to buy goods from them because they get goods at a cheaper price. A great example is when a multinational corporation produces a good for a very low cost, then exports it. Advantage is the economic basis for specialization and trade! It also leads to competition which helps to produce lower priced goods and more of a variety.