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Applied Economics Handouts

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12 views2 pages

Applied Economics Handouts

Uploaded by

danielajanegamido08
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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APPLIED ECONOMICS

Viability of Business in Community


SOCIO ECONOMIC
= also known as social economics
= the social science that studies how economic activity affects and is shaped by social process in
community.
POSITIVE IMPACT OF SOCIO ECONOMIC IN BUSINESS
1. Communicate effectively = business help establish a good relationship with the community.
2. Customer Driven-Business give trustworthy service to the community
3. Commit quality & continuous improvement = community will follow credible, knowledgeable and
experts in their fields & products
4. Business commit self development to the community = in which customers looking for and asking for
commitment that could be voluntary active

4 C’S
C = Communicate Effectively
C = Customer Driven
C = Commit quality & continuous improvements
C = Commit self development to the community
--
Advantages and Disadvantages of International Trade
Advantages of International Trade:
(i) Optimal use of natural resources:
International trade helps each country to make optimum use of its natural resources. Each country can
concentrate on production of those goods for which its resources are best suited. Wastage of resources
is avoided.
(ii) Availability of all types of goods:
It enables a country to obtain goods which it cannot produce or which it is not producing due to higher
costs, by importing from other countries at lower costs.
(iii) Specialization:
Foreign trade leads to specialization and encourages production of different goods in different countries.
Goods can be produced at a comparatively low cost due to advantages of division of labour.
(iv) Advantages of large-scale production:
Due to international trade, goods are produced not only for home consumption but for export to other
countries also. Nations of the world can dispose of goods which they have in surplus in the international
markets. This leads to production at large scale and the advantages of large scale production can be
obtained by all the countries of the world.
(v) Stability in prices:
International trade irons out wild fluctuations in prices. It equalizes the prices of goods throughout the
world (ignoring cost of transportation, etc.)
(vi) Exchange of technical know-how and establishment of new industries:
Underdeveloped countries can establish and develop new industries with the machinery, equipment
and technical know-how imported from developed countries. This helps in the development of these
countries and the economy of the world at large.
(vii) Increase in efficiency:
Due to international competition, the producers in a country attempt to produce better quality goods
and at the minimum possible cost. This increases the efficiency and benefits to the consumers all over
the world.
(viii) Development of the means of transport and communication:
International trade requires the best means of transport and communication. For the advantages of
international trade, development in the means of transport and communication is also made possible.
(ix) International co-operation and understanding:
The people of different countries come in contact with each other. Commercial intercourse amongst
nations of the world encourages exchange of ideas and culture. It creates co-operation, understanding,
cordial relations amongst various nations.
(x) Ability to face natural calamities:
Natural calamities such as drought, floods, famine, earthquake etc., affect the production of a country
adversely. Deficiency in the supply of goods at the time of such natural calamities can be met by imports
from other countries.
(xi) Other advantages:
International trade helps in many other ways such as benefits to consumers, international peace and
better standard of living.
Disadvantages of International Trade:
(i) Impediment in the Development of Home Industries:
International trade has an adverse effect on the development of home industries. It poses a threat to
the survival of infant industries at home. Due to foreign competition and unrestricted imports, the
upcoming industries in the country may collapse.
(ii) Economic Dependence:
The underdeveloped countries have to depend upon the developed ones for their economic
development. Such reliance often leads to economic exploitation. For instance, most of the
underdeveloped countries in Africa and Asia have been exploited by European countries.
(iii) Political Dependence:
International trade often encourages subjugation and slavery. It impairs economic independence which
endangers political dependence. For example, the Britishers came to India as traders and ultimately
ruled over India for a very long time.
(iv) Mis-utilisation of Natural Resources:
Excessive exports may exhaust the natural resources of a country in a shorter span of time than it would
have been otherwise. This will cause economic downfall of the country in the long run.
(v) Import of Harmful Goods:
Import of spurious drugs, luxury articles, etc. adversely affects the economy and well-being of the
people.
(vi) Storage of Goods:
Sometimes the essential commodities required in a country and in short supply are also exported to
earn foreign exchange. This results in shortage of these goods at home and causes inflation. For
example, India has been exporting sugar to earn foreign trade exchange; hence the exalting prices of
sugar in the country.
(vii) Danger to International Peace:
International trade gives an opportunity to foreign agents to settle down in the country which ultimately
endangers its internal peace.
(viii) World Wars:
International trade breeds rivalries amongst nations due to competition in the foreign markets. This may
eventually lead to wars and disturb world peace.
(ix) Hardships in times of War:
International trade promotes lopsided development of a country as only those goods which have
comparative cost advantage are produced in a country.

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