The paper "International Economics: Theory and Policy" is a wonderful example of an assignment on macro and microeconomics. Internal economies of scale are advantages that a firm enjoys for its expansion. They normally occur when an individual firm reduces its costs as its production increases. Internal economies of scale do not depend on the entire industry, but rather on the size of the individual firms. They only occur in the long run and depend on individual firms' actions. A good example of internal economies of scale is when a big firm is able to acquire funds on favorable conditions. External economies of scale normally occur outside a firm but within an entire industry.
They are achieved if the growth of the entire industry or firms’ group results in cost reduction for each firm. External economies of scale do not depend on each firm individual action. A good example of external economies of scale is when the industry’ s size of operation increases due to the development of a good transportation network, thus resulting in reduced costs for firms working within the industry. Intra-industry trade is a trade in which a nation imports and export within the same industry.
It is the trading of similar goods and services that belongs to the same industry. A good example of intra-industry trade is when Korea imports and exports cars (Eicher et al 220). Dumping refers to a situation in international trade in which a given nation or country floods the market of another country with low priced products. A good example of Dumping is when Japanese exports steel inventories in United States of America market at a price that domestic steelmakers cannot compete with. b) An export subsidy is a government policy that aims at encouraging the export of domestically produced commodities and discourages the sale of the same products on the domestic market.
Import tariff refers to the tax imposed by governments on goods and services that are brought into a country. Governments do always impose import tariffs so as discourage domestic consumers from purchasing commodities from foreign countries. Therefore, these two policies have a similar effect on aggregate supply.
Australian Government Productivity Commission (AUPC). Bilateral and Regional Trade Agreements. March 31, 2012 http://www.pc.gov.au/data/assets/pdf_file/0010/104203/trade-agreements-report.pdf
Carbaugh, Robert. International Economics. New York: Cengage Learning, 2010. Print.
Eicher, S, Theo, Mutti H., John and Turnovsky H., Michelle. International Economics. New York: Taylor & Francis, 2009. Print.
Krugman, Paul R, Maurice Obstfeld, and Marc J. Melitz. International Economics: Theory and Policy. Harlow: Pearson Education Ltd, 2011. Print.