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level: W01 Globalization of product markets

Questions and Answers List

level questions: W01 Globalization of product markets

Question	Answer
An absolute advantage means that your country is better at producing a product or service at a lower cost than the other nation. ex. India - Operating callcenters	What is an absolute advantage?
What you give up in order to produce something ex. Company Daili can produce 5 cakes or 10 muffins in 1 hour. If the choice is to produce 5 cakes than the opportunity cost is 10 muffins and vice versa	what does opportunity cost mean?
The ability to produce a particular product at a lower opportunity cost compared to a trading partner (nation or company)	Comparative advantage
Brings up ethical and social aspects prompting against international trade and company glabalization. ex . Child labor or dangerous conditions in producing factories. Solution: Multinational brands could develop code of conducts or get certified by an external partner such as fair trade, svanenmärkt etc.	What is the Values Dilemma and how can it be solved?
How are we really benefitting from the national trade? Bringing in a certain company will benefit some stakeholders while others might lose on it. Some industries and local producers can get outshined by foreign global firms. Tariffs are used as regulation for this. Solution: States can protect the vulnerable sectors and allow trade some jobs to compete in the open market.	What is the Distributional Dilemma and how can it be solved?
Touches upon the degree of freedom a country might lose by engaging in trade relations. Do we have to adapt to this new player if trade is enabled? Is our power position threatened by this foreign player? Solution: Some areas can be given up by the state to establish global agreements while protecting other areas and keeping sovereignty there.	What is the Sovereignty Dilemma and how can it be solved?
An organization practised by at least three countries, emphasizing on issues relating to all the countries. United Nations World Trade Organization World Health Organization The World Bank	Multilateral Organization