BU224 M1 Assignment Supply and Demand Analysis: An Expository Research Paper

BU224 M1 Assignment Supply and Demand Analysis

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An Expository Research Paper

Student Name

Purdue Global University

Prof. Name

BU224M1 

Submission Date

Part 1: Lab Competency Assessment 

I have completed the lab competency assessment, achieving a score of 260 out of 300.

Part 2: Answer Questions 

Demand and supply are some of the critical economic principles as they describe product availability and consumer interest in it. Supply is defined as the volume of a product or service where it is presented, while demand is the amount of product or service consumers are willing to buy (Van Nguyen et al., 2020). They control market price and allocation of resources, hence the distribution of necessary goods in the market. Globalization, imports, exports, multiculturalism, and sustainable trade are the fundamental parts of the modern economy. Analyzing the impact of supply and demand situations on market relations in perfectly competitive markets helps to better understand how prices are set and how resources are allocated. Moreover, knowledge of multiculturalism and diversity factors within the global environment emphasizes the need for cultural sensitivity and collaboration (Van Nguyen et al., 2020). The purpose is to investigate the potential advantages and limitations of international commerce, the effect of tariffs, and the need for the promotion of equitable international trade.

Economic and Personal Implications of International Trade

Comparative Advantage and Opportunity Costs

Comparative advantage deals with situations where one nation is capable of manufacturing products and delivering services at less operational cost when compared with its trading partners. This economic principle enables different countries to specialize in the manufacture of particular products, enhancing the levels of efficiency (Zameer et al., 2020). For instance, France can produce wine at a cheaper cost compared to cloth, while Bangladesh can produce cloth at a cheaper cost than wine; both parties benefit from this trade. Comparative advantage depends on the concept of opportunity cost, which relates to the benefits that can be accrued from the next best social activity (Howson & Ly, 2020). International trade is beneficial because it enables countries to have access to a wider range of goods and services at a cheaper price. They also improve efficiency and stimulation of the international division of labor by improving resource allocation and output, with positive repercussions on welfare.

Economic Benefits to the United States

International trade enhances the United States economy by expanding the market for its imports. Importing products that are not locally available or are cheaper than locally produced ones. For example, the U. S sells out technologies, foods, and automobiles among others thereby getting good revenues and employment opportunities (Autor et al., 2023). According to trade values reported by trading economics in 2022, US exports have gone over $2. 5 trillion, sustaining millions of employment opportunities all over the world (Congressional Budget Office, 2023). On the other hand, importing goods helps consumers to have various products such as electrical gadgets from Japan, and clothes from Bangladesh among others which can be cheaper than locally produced goods. International competition can put pressure on an industry to adapt and come up with new technologies to increase productivity within the United States (Congressional Budget Office, 2023). For instance, the automobile industry has been revolutionized because of competition from other foreign producers. This competition ultimately results in lower prices and higher quality goods and this leads to improvement in consumer surplus and economic growth.

Economic Benefits to Other Countries

Other countries benefit from international trade with the United States by exporting their goods and services into this significantly large market. This trade assists in improving the economy, employment opportunities, and advancement of technology. For instance, China and Mexico easily exemplify this since they have trade relations with the U.S. and have quite grown economically (Swanson & Romero, 2024). The products exported by China to the U.S. are electronic goods, machines, and textiles to add up to its gross domestic product. Auto, machinery, and agricultural products are some of Mexico’s export products it gains a lot from exporting to the U. S and it boosts employment and manufacturing. Moreover, it allows small and developing nations to become a part of the global market, and strengthen its economy and future. For instance, Vietnam and Bangladesh benefit economically from exporting garments and electronics to the U. S and other developed countries (Nguyen, 2023). Trade relations are not just about income but can also bring about technology transfer and skill development which are instrumental in the development of a sustainable economy and poverty alleviation.

Tariffs

Definition of Tariff

A tariff is a charge that is laid down by the government of a particular country on imported consumer products or services. It functions to control commerce, maintain local industries, and act as a source of revenue for the government (Scheipl et al., 2020). Tariffs discourage importation by putting a higher cost on the imported products concerning the price of domestic products and protect local industries from decreased competition from international players. For instance, a tariff tried by the US in its importation of steel products makes it costly for firms in the US to import steel products from other nations hence they are forced to source locally (Scheipl et al., 2020).

Who Pays the Tariff

It is common knowledge that the cost of tariffs is always incurred by consumers in the importing country. It serves as a kind of tax levied on importers of certain goods and the amount is often recovered from retailers down to the consumers through higher prices of the products. For instance, when the U.S. sets a tariff on electronics from China, the importers suffer the tariffs but the retail prices for these electronics are higher than American users can afford (Scheipl et al., 2020). It also helps in spreading the effect of tariffs around the population so that direct payment is incurred.

Who Receives the Proceeds

The revenue collected from tariffs belongs to the government that places the tariff in the international market. Such funds form a part of the government’s revenue base and may be utilized to finance a range of expenditures, such as on public utilities, schools, roads, and health facilities among others. For example, the money collected from tariffs can be used to construct roads, expand or develop schools, or finance healthcare (Kapologwe et al., 2020). These are extra sources of funds for the government through which they can comfortably fund public needs and development needs in the country.

Advantages and Disadvantages of Tariffs

Tariffs can also have some benefits like the protection of certain industries in a country from competition from other countries. Tariffs increase the price of imported products protecting local employment, and promoting economic self-sufficiency whereby domestic industries can enjoy healthy returns without being exposed to cheaper imports (Kapologwe et al., 2020). For instance, the tariff on imported steel helps the U. S. steel industry it protects employment opportunities for the steelworkers and the corresponding production in the United States. However, tariffs also have disadvantages that can be considered to be of significant proportions. This can result in higher prices for consumers since the price of imported consumer goods rises. This is because reductions in the selection of goods may reduce consumer choices besides putting a lot of pressure on household expenditure. Tariffs are known to cause other countries to retaliate by placing their tariffs on imported goods, resulting in trade wars. For instance, the taxes set by the U. S on Chinese products activated counter taxes, which in turn burden the exporters in America and increase the tensions of trade (Deng & Deng, 2024). This kind of exchange can negatively affect trading partners and overall international business and supply chains.

Furthermore, tariffs can be costly to a nation’s economy because they interfere with the efficiency of the markets by distorting the price determinants of market resources. While resources should be allocated following comparative advantage, tariffs distort optimal production and consumption effectively decreasing the welfare of the society (Deng & Deng, 2024). Tariffs can be useful in safeguarding domestic industries and sources of government revenue. The various consequences such as increased cost of goods and services, and potential trade wars may have negative effects on the economy.

International Trade and Multiculturalism

Relation to Backgrounds, Education, and Cultures in the U.S.

In the U. S, the diversity, education, and culture of the people as a boost to the trade relations globally. The presence of a multicultural workforce means that an organization will be exposed to different views and expertise which can help make the organization more creative and competitive within international markets (Deng & Deng, 2024). For instance, it is common to note that immigrants possess some good ideas and networks that can reveal new opportunities for trading. International business education is useful in making people ready to survive and more so to be effective in the global education system by giving them cultural awareness and language barriers (Jardim, 2021).

Relation to Backgrounds, Education, and Cultures in Less Developed Countries

For the countries of the third world, the overall stimulus of the population’s activities in the international market depends on the background, level of education, and various cultural models. These countries may struggle in terms of education and technology and may therefore lack the capability to compete in the global market (Jardim, 2021). For example, large populations such as Ethiopia and Bangladesh constrain their educational legacy only allowing their workforce to be involved in high-value trades. Cultural diversity could be an opportunity to produce and offer goods and services for the export of small traditional artistic and agricultural products that enhance economic growth and cultural interconnection (Jardim, 2021).

Importance of Understanding and Accepting Cultural Differences

It is crucial to recognize and appreciate cultural diversity in the modern world. They encourage employees to respect each other, solve problems with better practice, and boost collaboration. Culture plays a critical role in international business because it enhances communication, business partnership, bargaining, and customer reward. Therefore, leading to positive BD practices in international trade. For instance, observing cultural norms and practices can help improve America’s business relations with Japan and enhance the entry strategies of the latter’s companies(Swanson & Romero, 2024). Cultural competence also plays a part in advertising and promoting products in certain parts of the world that meet their culture and beliefs.

Negative Impacts of Not Understanding Cultural Differences

Lack of knowledge of culture may make individuals behave in ways that can be seen as unresponsive.  On an international level, this leads to failed negotiations, discolored business relations, and opportunities missed. For instance, due to a low level of cultural awareness, Walmart was unable to succeed in Germany because it did not align with Germanos’ purchasing patterns and business principles (Wortmann, 2020). A lack of understanding of cultural practices can be perceived violation of cultural expectations which can affect trade relations and lead to business losses.

Negative Impacts on People in Other Countries

Failing to observe cultural sensitivity can negatively affect the people in other countries by maintaining the dislike and leading to unfair inequalities. This lack of cultural sensitivity results in exploitation, colonization, eradication of cultural practices, and slow economic growth among these nations. For example, adopting and exporting Western business concepts without any regard for local cultures negatively affects the recipients’ economics and devalues their heritage (Wortmann, 2020). This insensitivity can create disturbances in society and opposition to global collaboration efforts needed to promote the global economy and world peace.

Inclusive and Sustainable Global Trade

Global trade cannot be successful unless and until culture, collaboration, and concern about ethical issues are properly understood and implemented. Culture protectionism also referred to as cultural nationalism, which helps integrate and develop the cultural heritage of a country with its global trading partners is important in protecting cultural diversity (Huq & Stevenson, 2020). Preserving national identity, the free trade policy in a way that will not lead to power imbalance. Some of the prerequisites that must be incorporated to make the World Trade Fair include payment of rightful wages to the workers and other humane practices to the environment. Schemes such as fair-trade certifications and corporate social responsibilities enhance these ethical standards and branding by supporting sustainable development. This approach is important in economic growth through trade while promoting and maintaining cultural differences than having an internationalized culture (Huq & Stevenson, 2020). Trade policies should incorporate ethical approaches in dealing with the consequences of globalization to ensure that other nations benefit from the opportunities arising from trade.

Conclusion 

International trade has a great implication for the economies of nations by working with supply and demand, tariffs, multiculturalism, and sustainability. They involve the economy, culture, customs, and ethical issues in international business relations. The concept of culture plays an important role in encouraging cooperation and the successful implementation of business cooperation to solve the problems of international trade. In the future, ethical standards and practices of fair trade will become critical components of inclusive economic development along with the defensibility of cultural heritage and problem-solving abilities. This approach implies that international trade generates positive impacts on the intended beneficiaries while preventing unfavorable consequences.