Now let’s break them down.

International trade allows countries to expand their markets and access goods and services that otherwise may not have been available domestically. As a result of international trade, the market is more competitive. This ultimately results in more competitive pricing and brings a cheaper product home to the consumer.

First—people respond to incentives. Second—each transaction has an equal give and take.

• 1 – Opportunities for Disadvantaged Producers.
• 2 – Transparency and Accountability.
• 3 – Fair Trade Principles.
• 4 – Fair Payment.
• 5 – Ensuring no Child Labour and Forced Labour.
• 6 – Commitment to Non-Discrimination, Gender Equity and Women’s Economic Empowerment, and Freedom of Association.

Equilibrium is the state in which market supply and demand balance each other, and as a result prices become stable.

General equilibrium theory, or Walrasian general equilibrium, attempts to explain the functioning of the macroeconomy as a whole, rather than as collections of individual market phenomena. The theory was first developed by the French economist Leon Walras in the late 19th century.

Changes in Market Equilibrium This could be caused by many things: an increase in income, higher price of a substitute good, lower price of a complement good, etc. Such a shift will tend to have two effects: raising equilibrium price, and raising equilibrium quantity. This is shown in the figure below.

FACTOR MARKET EQUILIBRIUM: Equilibrium in the factor market, which for a perfectly competitive market is achieved at the factor price and factor quantity give by the intersection of the factor demand curve and the factor supply curve.

A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.