Economics Analysis - Article Example

Comparative advantage is often measured in terms of the overall cost involved in producing any particular good or service. Further with the increase in the competition at the international level puts pressures on the international prices of the goods and it may become difficult for the firms to continue to export their products in the international markets at the current prices without reducing the costs or improving the technology to manufacture the product. The article under review discusses the wine industry of Australia and how the exports changed over the period of time due to certain factors.

This article discusses as to how the sales in terms of volume changed over the period of time besides the reduction in the prices at international level. This report will therefore focus on the application of microeconomic theory on the facts and statements made in the article and will provide a comprehensive discussion of how the international trade dynamics come into interaction with each other in international market. The article under study provides a historical overview of the Australian Wine industry and how it evolved over the period of time.

It also discusses some of the dynamics in international market and what are the factors on which competition between the countries is based. (McEachern 2003) It is critical to note that the article suggest that the Australian wine is regarded highly by the wine drinkers all over the world. Due to the quality of the wine, Australian companies have been able to erode the French domination from the market. This fact suggests that the Australian firms have been able to achieve the relative comparative advantage in international market due to the quality of the wine.

The above graph shows the composition of how the total production in the country is sold. It clearly indicates that most of the wine produced in the country is exported to countries like UK, US, China and Hong Kong thus suggesting that the