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16 Cards in this Set
- Front
- Back
For what 3 reasons do nations trade?
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1) Differences in endowments of economic resources
2) Different technologies/combinations of resources 3) Differences in international quality |
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What are examples of labor-intensive goods?
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Digital cameras, video game players, DVD players (large design and production needs)
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What are examples of land-intensive goods?
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Wheat, wool, meat (Need suitable environment for optimal preparation)
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What are examples of capital-intensive goods?
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Automobiles, chemicals, machinery (Fairly expensive ingredients)
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What does international trade enable nations to do?
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1) Specialization -Larger outputs of products and more efficient usage of world resources
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Comparitive Advantage allows Total World Output to be at its greatest when?
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Each good is produced by the nation that has the lowest domestic opportunity cost.
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Problem with specialization among nations?
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Opoprtunity costs rise as nations produce more of a particular good
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Domestic price?
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Price prevailing in a closed economy (aka no international trade)
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What are tariffs?
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Excise taxes on imported goods
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Revenue tariff?
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· Tariff designed to produce income for the Federal government
· Usually applied to product produced domestically |
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Protective Tariff?
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· Tariff designed to shield domestic producers of G+S from foreign competition
· Do not stop importation of foreign goods but cause serious disadvantage |
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Import Quota?
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Limit imposed by a nation on the quantity of a good that may be imported during some period of time
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Nontariff Barrier?
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ALL BARRIERS other than protective tariffs erected to impede internationnal trade including license requirements
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Voluntary Export Restriction?
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Trade Barrier by which Foreign Firms "voluntarily" Limit the Amount of their exports to a particular country.
· Avoids worse tariffs by country |
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What are four direct effects for a raise in the price of imports b/c of a tariff?
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1) Decline in comnsumption (less people actually want the good now)
2) Increased domestic production 3) Decline in imports 4) Tariff revenue (Total revenue x Number of imports |
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Protection raises the price of a product in what 3 ways?
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1) Price of Imported Product goes up
2) Higher Price of imports cause some consumers to shift purchases to higher-priced domestically produced goods 3) Prices of domestically produced goods rise because import competition has declined |