INSIGHT PAPER

Learning is constant. I really learn a lot on the previous discussion from my international
economics class. And one of the lesson discuss was the topic about the "Alternative Theories of Modern
Trade". Under that topic are the standard theory, which is the comparative advantage, it also discussed
about the intra-industry trade and how to measures The IIT index, economies of scale, monopolistic
competition, and the oligopoly and international trade wherein it discuss about the game theory. In other
words the Alternative theories of modern trade discussed about the various theories that in some way
expanded my perspectives on trade.

The lesson about the alternative theories of modern trade taught me the standard theory, which is
the comparative advantage which refers to producing output at lower opportunity cost. Comparative
advantage is one of the reasons why country do trading. The world trading consists of intra-industry
trade. Intra-industry trade is a two-way trade. It is a trade of similar products that belongs to the same
country. I also learned that the IIT index will range between zero to one, if the IIT index is Zero it
indicates that there is no intra-industry trade occur in the country, the country solely imports the good or
exports the goods. But, if the IIT index is 1 it indicates that there is intra-industry trade occur in the
country, and the country is exporting the same amount of the good as it is importing. The Economies of
scale is also one of the interesting lesson under the alternative theories of modern trade. In order for the
average cost of producing each unit of output to decrease, economies of scale—also known as increasing
returns to scale—must exist. This is accomplished by increasing expenditures on all inputs while
increasing output quantity by a bigger percentage. And I also discovered the game theory which
discussed under the oligopoly and international trade wherein In an oligopoly, businesses are impacted
not only by their own production choices but also by those of the competing businesses. Game theory
simulates situations in which each player must take other people's reactions into account when choosing
a course of action.

Alternative theories of modern trade is one of the interesting topic in the international economics,
since I really learned and realized a lot of things from it that I can use to strengthen my knowledge and
skills as a economics student. And as an economics student, I believe that it is essential to learn this
lesson because these are theories that broadened my perspectives on trade.