Use the following data to work. Wholesalers buy and sell...

Use the following data to work. Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the United States. The demand schedule is the wholesalers' demand and the supply schedule is the U.S. rose growers' supply. Wholesalers can buy roses at auction in Aalsmeer, Holland, for $\$ 125$ per container. a. Without international trade, what would be the price of a container of roses and how many containers of roses a year would be bought and sold in the United States? b. At the price in your answer to part (a), does the United States or the rest of the world have a comparative advantage in producing roses?

Use the following data to work. Wholesalers buy and sell roses in containers that hold 120 stems. The table provides information about the wholesale market for roses in the United States. The demand schedule is the wholesalers' demand and the supply schedule is the U.S. rose growers' supply. Wholesalers can buy roses at auction in Aalsmeer, Holland, for $\$ 125$ per container.
a. Without international trade, what would be the price of a container of roses and how many containers of roses a year would be bought and sold in the United States?
b. At the price in your answer to part (a), does the United States or the rest of the world have a comparative advantage in producing roses?

Key Concepts

International Trade Effects

International trade involves the exchange of goods across countries and can alter domestic market outcomes by introducing external prices. When domestic prices differ from international prices, trade can lead to adjustments in domestic production and consumption patterns based on comparative advantage. The interaction between domestic market conditions and world market prices shapes decisions regarding imports, exports, and overall market efficiency.

Comparative Advantage

Comparative advantage is the ability of an entity to produce a good at a lower opportunity cost compared to its trading partner. This principle underpins international trade decisions, indicating that even if one country or producer is less efficient overall, it can still benefit from specializing in the production of goods for which it has the lowest relative cost and trading for goods that are relatively more expensive to produce domestically.

Supply and Demand Analysis

This concept explains how market forces determine the price and quantity of goods that are bought and sold. The demand schedule represents the quantity of a product buyers are willing to purchase at various prices, while the supply schedule represents the quantity producers are willing to offer. The intersection of these two schedules determines the equilibrium price and quantity in the market, assuming there is no external interference such as international trade.

Market Equilibrium

Market equilibrium is reached at the point where the quantity supplied equals the quantity demanded. In such a state, there is no inherent tendency for the price to change because the interests of both buyers and sellers are balanced. This concept is central when determining the domestic price and the quantity of goods exchanged within a market prior to considering the effects of international trade.

Transcript

00:02 Hello students, so for our today's topic for discussion is international trade.

00:13 What do we understand by the term international trade? it could be defined as trade of goods and services across the globe along with and it also includes capital and labour flow as well.

00:31 Goods and services, capital and labor also.

00:41 Okay? the major force that drives international trade is comparative advantage.

00:48 So if we have a hypothetical situation and we have to determine the equilibrium point, if there is no international trade taking place and we have to calculate the equilibrium point.

01:05 So what do we understand by the term equilibrium? equilibrium could be defined as a point which is attained at a point.

01:20 It could be defined as a point where quantity demanded is equal to quantity supply.

01:37 So now understand how we will determine the equilibrium point in the situation.

01:50 The situation given to us is as follows that country you close roses.

01:59 Greel grow roses.

02:04 Whereas they can import from it other countries as well.

02:08 So the country you vote sellers, i will be demoting by gene, if the country is taking their products from their own country and if they are buying goods from the other country, so country to gold sellers can deal at an option at price dollar 125 and the data is as follows.

02:35 Price are denoted in dollar.

02:38 We have quantity demanded and we have quantity supply...

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