Intro To Microeconomic Essay

575 Words3 Pages
Everyone in the market- consumers, producers, politicians and public servants, they all pursue their self-interest (Mc Taggart, Findlay, & Parkin, 2010). Hence people will have desire for different types of goods and services. However, each country will only have limited resources so it cannot produce all types of goods and services which everyone demand (Mankiw, 2012). Therefore, in order to fulfill people’s needs, countries perform trade with one another to get goods and services that they cannot produce on their own. It is proved that countries as well as individuals get benefit from the ability to trade with one another based on comparative advantage and in terms of price of products (Mankiw, 2012). As reported in the article (“Pakistan seeks,” 2012), Pakistan and Malaysia are conducting bilateral trading with one another. Pakistan export agriculture products to Malaysia while Malaysia complements this with advanced food processing and halal standards to export back to Pakistan. The explanation of why both of these countries trade is due to the specialization in different area. This scenario clearly shows that countries realize that trade can make everyone better off (Mankiw, 2012) because there are many benefits gain when trade occurs. Therefore, both of the countries are taking advantage by producing what they are specialize in and leave the least specialize area to trade with another country to gain goods and services needed. When countries produce what they are specializing in, they will reduce the manufacturing cost and prevent wastage of resources. If they do no trade, both countries must produce both goods that they are not specialized in thus dividing the available capital and resources between the two tasks. With trading, people in Malaysia can receive quality and affordable agricultural products while Malaysia can return them in higher

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