Introduction to Business and Trade

Study Notes

A business is an organization engaged in commercial, industrial, or professional activities.
Businesses can either be for-profit entities or non-profit organizations.
Businesses can range from limited liability companies, sole proprietorships, corporations, and partnerships.
Business operations can range from small single-industry businesses to large, global operations.

Trade involves buying and selling goods and services, with compensation paid by a buyer to a seller.
Trade can occur within an economy between producers and consumers.

International trade is the exchange of products and services between countries.
This includes both imports (flowing into a country) and exports (flowing out of a country).

According to most economists, international trade helps boost a nation's wealth.
When individuals or companies purchase cheaper products or services from other countries, living standards can increase in both nations.
Foreign suppliers can offer cheaper prices, better quality, and wider availability.
Exporters benefit from sales that wouldn't be possible solely within their domestic market.
Exporters can earn foreign currency, which can be used to import goods and services.

While not always the case, the term "commerce" often refers to the buying and selling of goods and services internationally.

Adam Smith (1723-1790), a Scottish philosopher and pioneer of political economy, believed in international trade.
Many economists consider Smith the "father of modern economics."

Nations engage in international trade when domestic resources or capacity are insufficient to meet national needs and wants.
Countries can develop and exploit their domestic resources, creating surpluses.
These surpluses can be used to purchase goods needed from other countries through international trade.

International economics studies the economic activities of various countries and their consequences.
It examines economic and political issues related to international trade and finance and their impact on the global economy.
International finance focuses on the flow of financial assets or investments across borders.

International trade and finance became possible due to the emergence of globalization.

International economics analyzes the international forces that influence a nation's domestic economic conditions and shape economic relationships between countries.
It examines the economic interdependence between countries and its impact on individual economies.