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Manufacturing Activities of United States

The supply curve to the domestic market will be Abd1. The effect of imposing a quota will be to limit the amount of imported goods. Let us suppose the quota cuts imports from Q1-Q2 to Q1-Q3. A new supply curve can now be drawn incorporating the amount of the quota, BC, and the amount that domestic producers supply, AB ( at prices below Pw) and Cd2 (at prices above Pw). The world price Sw no longer acts as the relevant supply curve. The effect of the quota will raise the market price to Pq. This will reduce the benefit to consumers causing a loss of consumer surplus.

The advantages of the quota is that its affect will be more clear-cut that that of a tariff. With a tariff the impact of the tariff on the quantity imported by a company will depend on the price of elasticity of demand for imports. Tax will also be important to David Lloyds as their members will constantly pay a membership fee and some of the money will be taken by the government as a form of tax and as David Lloyds is a company based outside of China this will have a bigger affect

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on David Lloyds as more tax may be taken as the government know that it is making money outside China as well.

So revenue of David Lloyd will be coming in from China and the UK and this will not have a positive affect and the tax deducted will be taken from David Lloyds overall profits and figures. This can cause problems for the company as they will have to manage their wages and expenses better and more efficiently in order to continue operating and not be taken into administration. Absolute Advantage In order to understand more fully how international trade takes place and increases the welfare of its citizens we need to consider why trade takes place.

To do this the principles of comparative and absolute advantage takes place. A country has absolute advantage over its competitors its competitors if it’s able to produce more. As a company is able to do this the company will remain competitive in the market. This may be because of the fact that they may have more of a good service and provide more even with the same amount of resources which they have available to them.

This will be of some importance to David Lloyds as the management will have to consider how they can not only meet the resources required to their competitor gym in China but also how to beat it in terms of service as just matching them is not enough they have to offer that something special as consumers will be looking for that when David Lloyds tries to sell itself in China. Principle of Comparative Advantage David Ricardo when he talked about his theory said that countries should specialize and trade goods and services in which they have a comparative advantage.

It is easy to see that if countries have and absolute advantage there are rewards to trade for that particular company. But if a company has absolute advantage over its trading partner in the production or amount of services offered to its consumers. Specialization and trade can still result in there being welfare gains made from trade. A country has Compartitive advantage in the production of a good or service that it produces at a lower opportunity cost that its traders. Some countries even have an absolute disadvantage.

This is when the country is not good at producing services and goods when compared to its trading partners. The theory just argues that it is better for a country that is inefficient at producing a good or service to specialize that in the production of that good that it is least good at producing (best at producing). The production possibility curve can be used to show the principles of this theory. Figure 2 As you can see in Fig 2 Country A has an absolute advantage in the production of both maize and wheat.

At all points its production possibility curve lies on the right of that of country B. Country B has an absolute disadvantage. Due to the abundance of raw materials or more productively efficient production techniques, Country A is able to produce more wheat and more maize when compared with country B. Perhaps common sense tells us that Country A should produce both goods and export surpluses and Country B neither. However, when comparative advantage is considered a different picture emerges.

Consider the opportunity cost of Country A producing one more unit of maize. Half a unit of wheat has been expected. When country B produces one more unit of maize two units of wheat are predetermined. Economics is concerned with the allocation of scarce resources. Fewer resources are taken if Country A concentrates its resources in the production of maize. Now consider the opportunity cost of Country B producing one more unit of wheat. Two units of maize have been taken. When Country B produces one more unit of wheat only half a unit of maize is taken.

Fewer resources are used if Country B specialises in the production of wheat. In the above case Country A should produce maize and Country B wheat. The surpluses produce should then be traded. This is important to David Lloyd, as they will have to think whether or not they have a Compartitive advantage over the other gyms and this can play a vital role in their possible success and downfall of the company. David Lloyd’s will also have to produce well planned out marketing strategies in order to promote and sell their gym well to customers within China.

Manufacturing Activities of United States, China and Afghanistan The three different stages of development mainly consist of a developing country, a developed country and a non-developed country. Developed Country United States The United States is a developed country as it has all the resources needed to them and they are financially secure as the country is wealthy. The United States has established itself as a powerful country both financially and as a force.

The government that has been elected also work together and strive to continue to improve the financial state of the country. This is seen in their sharp increase in GDP over the last few decades from 3,228. 6 to 10,416. 8 in 2002 see appendix a and fig 1. This helps to show the power, which the United States has. The United States is the worlds leading trading nation as it has a trade volume of US$1,330 billion in 1995. Total merchandise exports in 1995 amounted to US$585. 7 billion, and imports to US$743. 4 billion.

Beginning in the mid-1970s, the nation’s imports of expensive foreign petroleum and of manufactured goods from Canada and Asia (especially Japan) created a trade imbalance. From 1984 to 1990 the annual merchandise trade deficit regularly exceeded US$100 billion. Non-agricultural products usually account 90% of the yearly exports and agricultural amounts to 10% respectively and this shows Machinery and transport equipment make up the leading categories of exports, amounting together to about 33 per cent of the value of all exports.

You can see this in appendix a under Structure of the economy which helps to show that manufacturing services and industry account a higher percentage when compared to agricultural. It shows that agriculture has decreased as have industry but services have seen an increase and all of these including manufacturing account for a higher percentage when compared with agriculture. Also the U. S. A. ‘s exports have rapidly increased which means that their products are more and more in demand by other countries.

They have increased from 216,442 in 1982 to 693,517 in 2002 see appendix a. Figure 3 America can also put across the fact that Manhattan, which is one of the boroughs of New York, is the headquarters of much of the world’s international trade although the Sep 11th tragedy did hinder the progress of trade within the country as well as the world. Below is a picture of the towers before the tragedy of Sep 11th.

For a better view on what U. S. A imports and exports and it main trading partners see appendix c: 1. Figure 4 China Developing Country China is a developing country because over the last few decades it has seen a boom in the number of exports that it has needed to do also the technology it offers has improved vastly and this has seen a demand in the amount of countries and businesses that are interested in buying this new type of technology.

China has seen a steep increase in the number of exports it makes. This has risen from 24,906 million $ in 1982 to 325,565 million$ in 2002 see appendix b this has had a good impact on China as the money that is received can be used to improve the conditions of the country and improving the infrastructure of the country and by this it can help travel and reflect well on the country as a whole.

As the money being received gets higher and higher and the financial situation of the country gets better and better it will look good as the money received can be used to open up hostiles for homeless people to live in and this can look good for the country as less and less people will be living on the street as China is providing care and help for the homeless. Also money received by the exports can be used to help fund scientists with the money needed to find cures for viruses and reduce the amount of people being killed by disease and famine.

The SARS case, which recently came into China, is a prime example of this. China by doing this will be on its way of being a country that can be put alongside the ranks of the UK and USA. In 1979 China relaxed certain trade restrictions, paving the way for increases in the relatively small foreign investment and trade activity. By 1996 exports totalled about US$151. 1 billion and imports about US$138. 9 billion.

By 1994 over US$39 billion of foreign investment had entered China, and foreign-funded firms were responsible for over 27 per cent of its exports. The main Chinese exports included crude and refined petroleum, cotton fabric, silk, clothing, rice, pork, frozen shrimps, and tea. Among the major imports were machinery, steel products, other metals, cars, synthetics, agricultural chemicals, rubber, wheat, and ships. Japan is China’s chief trading partner, followed by Hong Kong and the United States.

China also has widespread trade relations with countries such as Germany, Taiwan, and Singapore. Trade relations with the United States were in doubt in 1993 when the United States threatened not to renew China’s “most favoured nation” (MFN) trading status unless human rights conditions in China improved. However, in May 1994 the United States renewed China’s MFN designation, even though the Chinese government had made little progress towards improving its human rights record.

As you can clearly see in figure 3 China is quite a big country therefore the population in the country will be high so a lot of people within the country will be employed and earning money this helps the annual growth of the country. You can see in appendix b that about force has seen a steady increase from 1996-2002. Also China have to be aware of the fact that there are bound to be people homeless so China will have to cater for this as at the moment it is 5 % of the population which is under the national poverty line.

Although China is still developing it will not be long until it is in line and as powerful as other countries such as the UK and U. S. A. Afghanistan- Non-Developing Country This is a country that is poverty stricken and a country that has problems with its finance this was all due to the talibans and their strict regime that they put people through and this was not good as the government was also heavily intimidated by Osama Bin Laden and his crew.

As the events of September the 11th grew it affected the country vastly as the person responsible for this was living in Afghanistan and in order for the USA to find him they had to bomb Afghanistan this lead to innocent lives being lost and a whole load of refugees leaving the country and inhabiting others. This was not good for the country, as the damage that they received would put dents in their already poor financial position. Although America helped out it still left problems with food and starvation and the amount of people killed.

This was not good, as Afghanistan had nothing really to export from which it could receive money and revenue. As the war scenario cleared up a rebuilding process began in Afghanistan as they were now rid of the talibans regime and this meant that the country had a second chance to start again and build itself but the country is still in this process of building itself and it has still got nothing much to export and until the country has something to offer other countries such as oil, gold, silver e. t. c. It will not start to develop.

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