( Chapter 5. Question 4 ) Pulling on the theory of comparative advantage to back up your statements. sketch the instance for free trade. Harmonizing to the theory of comparative advantage. a state should specialise in the production of goods that it is good at bring forthing. and purchase the goods from another state that it is less efficient at bring forthing. Therefore if state X can bring forth merchandise A more expeditiously than merchandise B. while state Yttriums can bring forth merchandise B more expeditiously than merchandise A. so they should merchandise ( even in the state of affairs wherein state X has an absolute advantage over state Y in bring forthing both merchandise Angstrom and merchandise B ) . Country X should sell state Y merchandise A and purchase merchandise B from state Y. Both state will profit from trade in this state of affairs.

( Chapter 7. Question 5 ) Explain how the political relations of a host authorities might act upon the procedure of negociating entree between the host authorities and a foreign MNE. The tolerance or restrictiveness on the portion of the host state toward FDI will hold a large impact on the result of the dialogue between the host authorities and a foreign MNE. For illustration. in the instance the host authorities is really interested on what the foreign house has to offer. so the MNE bargaining power will be high. On the contrary. if the host state is lukewarm on what the foreign house has to offer. so MNE dickering power will be low. Besides. if the options open to the MNE are many and clip is non critical ( the MNE can afford holds ) . so the MNE will be in a really strong place to negociate to acquire the best trade.

Mentions

1. Globaltrade. cyberspace. 2012. Globaltrade. cyberspace. [ Online ] Available at: hypertext transfer protocol: //www. globaltrade. net/international-trade-importexports/f/business/text/Egypt/Business-Environment-Doing-Business-in-Egypt. hypertext markup language [ Accessed 11 November 2012 ] .