Trade theories provide frameworks for understanding international trade and its effects. Absolute advantage theory suggests that countries should specialize and trade based on whichever goods they can produce at the lowest absolute cost. Comparative advantage theory builds on this, stating that mutual benefits arise when countries trade based on their opportunity costs even if one country is more efficient in all goods. Practical examples from an organization's products and services can demonstrate which trade theories best apply in their context.

1. Chapter 5.
Trade Theories

31. Class Activities
• Explain and differentiate trade theories in terms of your organization
product and service.
• Which theories are better applicable in your organization? Use
practical example