The Republic of Argonia, owing to its vast resources of arable land and fresh water, is an agrarian nation It exports agricultur
al products and in turn imports products that it does not produce such as oil, machinery, computers, and electronic devices. The result is that it spends more on imports than it gains from exports. Which of the following theories prohibits such international trade? A. New trade theory
B. Product life-cycle theory
C. Mercantilism
D. Heckscher-Ohlin theory
E. Theory of national competitive advantage
The theory of mercantilism is of the opinion that a nation should strengthen its economic power as well as generate abundant wealth by reducing imports whereas exports is tremendously increased with aim of achieving trade surplus rather than a trade deficit.
In order to achieve this feat a nation needs to embark on industrialization that makes it possible to convert its primary products into semi- or finished products that command higher value than exporting them in their raw state.
Explanation: Mercantilism is a national economic policy made to promote and increase exports and reduce import in a country. It involves national policy with the objective of accumulating reserves (monetary) achieved through positive balance of trade. Mercantilism reduces current account surplus or reduce a possible current account deficit. In the past such policy had led to war and encouraged colonial expansion.
Europe was the epic center of mercantilism from the 16th to the 18th century before it fall, but some people still believed mercantilism is still practice in industrialize nations.
<span>No, specific performance is not allowed in this case because money damages are available. In case that a party failed to fulfill the condition that signed on the contract, the court could give 1 of 2 form of punishments. The first is to forcibly make that party perform the condition (specific performance), the other is to pay back the loss that incurred because of that party fail to fulfill the condition (money damages)</span>
Value based pricing is a pricing strategy to set price of products based on value perceived by the purchaser. To have increased profit margin, business deduces the number of benefit the product provides to consumer. Then it establishes price which takes consideration of manufacturing cost, competitive price and consumer's willingness to pay price for the goods.
In the question mentioned IKEA not only provide functional benefit for the product but also quality, design, and services at low prices hence it is an instance of value based pricing.
