Free Trade and the Economy of Canada Essay example -- Economics Global

Free Trade and the Economy of CanadaFree mete out is the act of exchanging goods or services between countries for minimal tariffs or fees. amidst countries, this is a method of exchange that is gaining more and more popularity. By import and exporting for low fees, tolerant softwood is an efficient way to transit up weaknesses in the coun try and gain on strengths. Free trade is a very controversial topic that is viewed upon differently by many a(prenominal) people in many different countries. Some oppose guiltless trade they feel it will cause production losses or low employment in their country. Many countries also embrace it and commit it helps create a strong and healthy nation. They join in free trade organizations or draft free trade agreements with separate countries to try and capitalize on the potential benefits. In Canada, free trade with new(prenominal) countries is embraced and as a direct result, both business and consumers experience undischarged economic an d social prosperity.Ask any economist and they will put you one of their main principles, which they rely on as if it were a poetise from the bible, is free trade makes everyone better off (Mankiw, Kneebone, McKenzie & Rowe 9). To explain this, the terms prospect cost and comparative advantage mustiness first be defined. The fortune cost of an item is whatever that must be given up to attain that item (Mankiw, Kneebone, McKenzie & Rowe 53). For instance, if you are a farmer and decide to increase corn all today, you are deciding not to feed the chickens or draw cows. Thus, the hazard cost to attain corn would be the milk or eggs that you flowerpotnot gather. When producing goods, each country has an opportunity cost for an item. They cannot maintain every single item they want some good must be given up in order to attain other goods. For example, Canada may have the decision on whether they should allocate resources to manufacture ergocalciferol computers or 1 car. The o pportunity cost for one computer would be the enactment of cars that can be produced divided by the number of computers that can be produced, which is 0.002 cars. Alternatively, the opportunity cost for one car would be the number of computers divided by the number of cars, which are 500 computers. Consider also, for instance, that another(prenominal) country, Japan, could produce 1000 computers for every 1 car. Then, Japans opportunity cost for computers would be 0.001 cars. When com... ...her developed countries. Free trade must be continually embraced in Canada for businesses and consumers to continue enjoying the high economic and social prosperity that is currently occurring.Works CitedBhagwati, Jagdish, The Pure Theory of world-wide Trade A Survey, The Economic Journal, Vol 74, No. 293, Mar 1994. pp. 1-84BBC News, The Argument for Free Trade, http//news.bbc.co.uk/1/hi/special_report/1999/11/99/battle_for_free_trade/533208.stm, Feb 12, 2003Bureau, Jean-Christophe, Salvatici, Luca, WTO Negotiations on Market Access in Agriculture a Comparison of Alternative Tariff Cut Proposals for the EU and the US, Topics in Economic Analysis & Policy, Vol 4, Issue 1, March 26, 2004, pp 1152International Trade Canada, Canadas Trade Negotiations and Agreements, http//www.dfait-maeci.gc.ca/tna-nac/menu-en.asp, Nov 18, 2004Mayer, Frederick, Interpreting NAFTA, Colombia University Press, Oct 15 1998Mankiw, Kneebone, McKenzie & Rowe, Principles of Microeconomics 2nd Edition, apprentice Hall, 5th Edition, Jul 27, 2000Murphy, Robert P., Who Benefits From Free Trade, and How, http//www.mises.org/fullstory.aspx?control=1429, Jan 23, 2004