An Economy Play Vital Role Of A Country Essay

3466 Words Jul 7th, 2015 14 Pages
An Economy play vital role in the development of a country. Every country has main factors of production like land, labour, capital goods and entrepreneurship. There are four basic fundamental choices in front of a country 1. What to produce 2. How to produce. 3 For whom to produce. 4 What economic system to use: traditional economy , centrally planned economy, free market economy or mixed economy. Product Price plays significant role for consumer and producer. Consumer wants maximum well-being and producer seeks maximum benefit. Now a day every country has limited resources to satisfy their unlimited wants, it give rise to economic problem. Subsequently when these desires constantly exceed the resources then the problem of scarcity comes up. The low opportunity cost was easily managed by country but the need for trade raised when the high opportunity cost was required and the countries have to depend on others to fulfill that needs. In other words, a country can maximize their wealth by producing the things that have a low opportunity cost and pay someone else to produce the things that have a high opportunity cost.
Comparative advantage: A comparative advantage is ability of the industry to do something means to produce the goods and services at low opportunity cost so that they can sell more goods and services than other industries.With this industry can sell maximum goods and services at lower price with maximum profit.
This theory states that if every…

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