Help
Options
Term
Imports
click to flip
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't know
Term
Exports
Remaining cards (26)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Chapter 8
Micro
| Term | Definition |
|---|---|
| Imports | goods and services purchased from other countries |
| Exports | goods and services sold to other countries |
| Autarky | situation in which a country cannot or does not trade with other countries |
| Globalization | phenomenon of growing economic linkages among countries |
| Comparative Advantage | country produces a good/service if the opportunity cost of producing the food or service is lower for that country than for other countries |
| Ricardian model of international trade | analyzes international trade under the assumption that opportunity costs are constant (PPF's are linear) |
| Main sources of comparative advantage | 1. Differences in tech- able to produce a good at lower cost 2. International differences in climate 3. Differences in factor endowments 4.Increasing returns to scale |
| Heckscher-Ohlin model | comparative advantage is derived from factor endowments (labor&capital) that are relatively abundant in that country |
| Factor intensity | -measure of which factors is used relatively greater quantities than other factors in production |
| Increasing Returns to Scale | if output can be increased using a less than proportional increase in the factors of production -factor productivity increases as output increases-can give rise to monopoly-can give rise to international trade |
| Domestic Demand Curve | shows how the quantity of a good demanded by domestic consumers depends on the price of that good |
| Domestic Supply Curve | shows how the quantity of a good supplied by domestic producers depends on the price of that good |
| World Price | price at which that good can be bought or sold abroad -if wp is lower than the autarky price, trade leads to imports and a fall in domestic price compared to wp |
| Consumer Surplus | net economic value consumers get from consuming a good or service |
| Producer Surplus | net economic value of producing a good or service |
| Imports ________ consumer surplus, but __________ producer surplus | increase, decrease |
| Exports ________ consumer surplus, but _________ producer surplus | decrease, increase |
| If ______ is higher than the autarky price, trade leads to exports and a rise in the domestic price compared with the wp | world price |
| Free Trade | when government does not attempt either to reduce or to increase the levels of exports and imports that occur naturally as a result of supply and demand |
| trade protection | policies that limit imports |
| Tariff | tax on imports |
| Import quota | legal limit on the quantity of a good that can be imported |
| Advocate of tariffs and import quotas offer a variety of arguments. 3 common ones are: | 1. national security 2. job creation 3. the infant industry argument |
| International trade agreements | treaties in which a country promises to engage in less trade protection against the exports of other countries in return for a promise by other countries to do the same for its own exports-NAFTA |
| World Trade Organization | multinational organization as well as adjudicate trade disputes between member countries |
| European UNion | customs union amonf 27 European nations |
| Offshore Outsourcing | takes place when businesses hire people in another country to perform various tasks |
Created by:
kthomas96
Popular Economics sets