INSTRUCTOR DISCUSSION NOTES:
Trade May Unite Cultures

1. Use any source available to define competitive advantage.

In its simplest form, a country is said to have a competitive advantage in the production of good X if the opportunity cost of producing a unit of X, in terms of other goods foregone, is lower than the cost of producing a unit of X in another country. You could also guide your students to a good example at http://economics.about.com/cs/economicsglossary/g/comparative.htm

2. How do you think improved relationships between Japan and India offset Chinese economic influence in Asia.?

As Japan and India form economic relationships through international trade they will each become stronger in some ways. Japan, being a small country has limited opportunity for growth. By partnering with India and conducting manufacturing activities in India they can take advantage of their own manufacturing know how while enjoying the cheap labor India has to offer. India will gain many jobs and consumer income will increase. Both countries economies should grow and offset some of the growing economic influence of China in the Asian countries. For an interesting article and more information on the economic relationship between Japan and India visit http://www.economywatch.com/world_economy/japan/indo-japan-trade-relation.html.

Multiple Choice/True False Questions

1. India has a competitive advantage in labor.
  1. True
  2. False
ANS. a

2. Autos produced in India would not be competitive on the world market.
  1. True
  2. False
ANS. b

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