International Trade

In simple sense international trade means the exchange of goods and services approach the international borders.

In broad sense, international trade deals with the issues related to the exchange of goods and services, capital and factors of productions between traders approach nationals bounders on market.

There are two theory of international trade:
1. Absolute advantage theory: Absolute advantage refers to differences in productivity of nation. The ability of a country, individual company or reason to produce a good or service at a lower cost per unit then the cost at which any other country produces that good and service.
2. Comparative advantage theory: Refers to differences in opportunity cost (describes what sacrifice is when one choice is taken over another). Comparative advantage gives a company the ability to sale goods & services at a lower price than its competitor.