The Simple Trade Model Demonstrates That Countries Can Expand Consumption

question 12

Essay

The simple trade model demonstrates that countries can expand consumption by specialising in the production of goods and services in which they have a comparative advantage.In reality we do not see complete specialisation in production.State three reasons why this is the case.

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Definitions:

Interest Revenue

Income earned from lending money or from investments in interest-bearing accounts or securities.

Matching Revenue

The accounting principle of recognizing revenue and the related expenses in the same accounting period to accurately report profit.

Incurred Expenses

Costs that have been realized or consumed, typically through the operation of a business.

Net Income

The total earnings of a company after deducting all expenses, including taxes and costs, from its total revenues, indicating its profitability.