The quantities of the commodities that a country would like to export and import are perfectly represented by an offer curve. Offer curve of a country gives the country’s willingness to export and import in terms of relative quantities.

David Hume constructed what has become known as the specie-flow theory of the movement of money and goods between nations to assure equilibrium among international prices and the distribution of specie (or commodity) money among countries that are trading with each other.

THE RISE OF INTERNATIONAL TRADE THEORY AND MERCANTILISM

During the mercantilist period, nation states were established instead of feudalism. The official economic doctrine of the newly established nation-states was mercantilism. According to mercantilism, the main objective of foreign trade policy is to increase the gold stock (Krugman, Obstfeld, Melitz, 2017, p. 26). It was the interventionist system that focused on export in order to increase the gold and silver reserves. They gave importance to increase export, thus foreign trade surplus. On the other hand, they prohibited the import of products. Imports of raw materials were free. Traders also attached great importance to the development of the trade fleet to increase gold inflow.

According to the mercantilist doctrine, countries should export more than they import. World wealth (gold or silver stock) is constant and cannot be increased. Therefore, there is always a contradiction among  the foreign trade countries. While one side of trade is profitable, the other party suffers equally. Mercantilists assumed trade was a zero-sum game that it could not be mutually beneficial to all parties. Mercantilism is an economic theory that holds that the prosperity of a nation is dependent upon its supply of capital, and that the global volume of international trade is “unchangeable”.

As we all know, Classical Trade Theory, Neo-Classical Trade Theory and the Heckscher-Ohlin Theory assumed that technology level is constant in trading countries. According to these theories, the basis of the comparative advantage depends either on the differences in labor productivity or factor endowments, leaving technological differences aside.

The quantities of the commodities that a country would like to export and import are perfectly represented by an offer curve.

Digital economy: It is a term that incorporates all the economic processes, transactions and activities on digital technologies. Digital economy has a broader scope than the internet economy since it embraces many digital tools including the internet and its facilities while the internet economy refers only to the internet connectivity. Doğru yanıt " E " dir.

Monopolistic competition is a market type in which there are many firms competing with each other. Each firm produces a differentiated commodity. Firms compete on the basis of commodity quality, price, and marketing. It’s easy to enter in and exit out from the market. In imperfect competition, firms can influence the prices of the commodity which they produce. Thus, they are not just price takers as in the perfect competition. Conversely, they can be price setters. The basic type of imperfect competition is monopoly in which there is only one producer. In monopoly, the firm does not face a competition and thus is the price setter itself. Intra-industry trade occurs when a country exports and imports with the same commodity category or industry as a whole.

The term is usually attributed to David Ricardo who explained it in his 1817 book “The Principles of Taxation and Political Economy”.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE

International trade which constitutes one of the two main parts of international economics has its own key words and concepts. Although they are mostly well-known, it’d be useful to give their precise meanings so as to provide conformity and consistency throughout the chapters. (1) Volume of trade: Defining the key terms and concepts has to start with the term volume of trade. Volume of trade gives the total amount of imports and exports. Imports are the goods or services that are bought from a foreign country while exports refer to the goods or services that are sold to a foreign country. Thus, balance of trade gives the difference between total imports and total exports. If total imports are more than the total exports within an economy, then there is a trade deficit. On the other hand, when total exports exceed total imports, it means that there is a trade surplus.

Laissez-faire means “leave it alone.” Usually it describes the economic policy of a government that stresses non-interference in business. The phrase laissez faire comes from the French phrase laissez faire et laissez passer, “Let be and let pass.”

Opportunity cost is usually defined as the value of the next best opportunity. In the context of national production, the nation has opportunities to produce lemonade and yoghurt. If the nation wants to produce more yoghurt, because of labour resources are scarce and fully employed, in order to increase yoghurt production, it is necessary to remove the worker from the production of lemonade. The loss of lemonade production, which is necessary to produce more yoghurt, represents the opportunity cost for the economy

Balance of payments is a summary statement of an economy in which all the international transactions of its residents are recorded during a calendar year. Essentially, balance of payments displays the foreign currency inflows and outflows of an economy at a particular period of time. Balance of payments gives fundamental information on the foreign exchange status of an economy for the government, investors and the foreign traders.The correct answer is "A".

Along with rapid globalization, demand preferences are more or less the same across countries. Thus, the ‘Demand preferences are the same in both countries’ assumption of the Heckscher- Ohlin Theory is probably the one that best fits today’s international trade environment.

The Gains from Trade

The earnings from each country’s trade depends on the international price level in the ongoing international trade balance. As individuals, we benefit from receiving high prices for the products we sell and paying low prices for the products we buy. A similar principle applies to countries. A country gains more from trade if it receives a higher price for its exports compared to the price that it pays for its imports. For each country, trade gains depend on the country’s international terms of trade, which are the price the country receives from foreign buyers for its export products, relative to the price that the country pays foreign sellers for its import products (Pugel, 2015, p. 59).

The first scientific study of international trade begins with Adam Smith’s famous book, The Wealth of Nations, published in 1776. Later on, David Ricardo, John Stuart Mill, Alfred Marshall, Eli Heckscher, Bertil Ohlin, John Maynard Keynes, Jacob Viner and Paul Samuelson made significant contributions to this theory.

Autarky: The situation in which a country does not trade with the rest of the world.

We are now introducing tastes or demand preferences in a nation. These are given by community indifference curves. A community indifference curve shows the various combinations of the two commodities that provide equal satisfaction or happiness to the community. The higher the curves the more satisfaction, the lower the curves the less satisfaction is expressed.

Imperfect competition: It is a market structure in which the conditions of perfect competition do not prevail. Imperfect competition can either be in the type of monopoly, oligopoly, monopolistic competition or monopsony, oligopsony, monopsonistic competition. The correct answer is " C ".

Laissez-faire means “leave it alone.” Usually it describes the economic policy of a government that stresses non-interference in business. The phrase laissez faire comes from the French phrase laissez faire et laissez passer, “Let be and let pass.”