Consumer Choice Several factors contributed to exchange of goods within the flats. They include poverty. Since no one family could afford a surplus in their basic commodities, they would often exchange their respective goods and gain the required goods. Social networks also enabled the exchange of gifts and goods since a closely-knit society can expand rapidly. Other factors include the establishment of social relationships between all the races that lived in the flats. Reciprocity has many distinctive meanings in various fields. In this case, reciprocity in business refers to the mutual exchange of equal advantages, for example, the lifting of travel advisories or bans between two countries.
It can also be explained as the lowering of import duties and lifting of trade barriers and expecting the other countries to do the same. Reciprocity can only be practiced by nations whose economies are similar due to its unique nature and can conduct business without causing any damage to their respective economies. Reciprocity in social psychology refers to the responses a person exhibits in response to a positive action. It is responding to positive action with another positive action.
People are usually much nicer and cooperative if treated in a good manner and respond towards friendly actions. However, the same responses can be exhibited towards harsh and hostile behaviors. Reciprocity is important because, not only does it establish a business relationship, it also embodies a social relationship, as well. Reciprocity also enhances the business, customer relations as depicted by customers giving more tips to the smiling waiters and waitresses more than the quiet unresponsive ones. Reciprocating a good, deed shows appreciation for the gesture given and would like reciprocate by doing something similar for the individual (Baumol and Blinder, 13) In reciprocity, money is not needed to conduct business.
Therefore, countries only have to trust one another and exchange the goods they have. Countries save a lot of money by engaging in this form of trade since each country lifts its import and export laws in order to reap maximum benefits. The lifting of trade embargos means the country can import large amounts of goods and it only has to allow the other nations take something for themselves, as well.
Since reciprocity is a fundamental principle, all the players within this process benefit from it. A capitalist economy is whereby a stake within the economy is partly owned by individuals. Every decision has to run by them and this affects the ability to transact business within international trade. In a capitalist economy, there is little interruption of the trading process by the government. This means there is no taxation although the countries involved are only after profit maximization. In a capitalist market, failures occur, and the effects are felt in the economy and they take time to recover since the affected countries chose to pump money in the trading process as compared to the reciprocity model whereby countries only exchange their products in the hopes of gaining other if not similar products.
This process is also referred to as barter trade (Knoedler, 2007, 114). Works Cited Baumol. W, J. and Blinder A. S. Microeconomics Principles and Policy. New York University and Princeton University: Cengage Learning, 2012. Knoedler, Janet T, Robert E. Prasch, and Dell P.
Champlin. Thorstein Veblen and the Revival of Free Market Capitalism. Cheltenham, UK: Edward Elgar, 2007. Web Sanderson, Catherine A. Social Psychology. Hoboken, N.J: Wiley, 2009. Print.