4.1 importance of international trade

Question 1

exports definition

Answer 1

goods ands services sold abroad

Question 2

imports

Answer 2

goods and services brought from abroad

Question 3

International trade

Answer 3

The exchange of goods and services between countries

Question 4

Free trade

Answer 4

Trade without restrictions

Question 5

benefits of international trade for consumers

Answer 5

greater choice as consumers and firms will have access to products not domestically produced. Trade improves the availability of products as well as the quality and quantity of them.

Higher living standards will be achieved if more products are consumed as a result of trade. Potentially more goods are consumed by consumers in all countries as goods are being produced where production and natural resources are most efficient.

Better quality goods and services due to the spread of technology and innovations in products such as mobile phone technology.

Lower priced products because consumers will be able to access cheaper internationally traded goods and services.

Question 6

benefits of international trade for producers

Answer 6

Producers have a larger market to sell in -> expansion as they sell to more consumers -> increased efficiency due to economies of scale -> decreased average costs -> increased profits.

Producers have access to larger markets for inputs -> firms having access to a wider range of raw materials,

Firms are exposed to greater levels of competition -> keeping efficiency high -> low prices and an improved quality

International exchange of goods and services allows greater spread of new technologies and ideas.

Question 7

Costs of international trade for consumers

Answer 7

countries can become overdependent on trade in specific product areas and with specific partners they could also become too dependant on imports. If trade is disputed -> increased costs

Over reliance on essential food supplies, trade disputes could have serious wider effects.

Question 8

Costs of international trade for producers

Answer 8

Firms may not be able to complete with foreign firms -> going out of industries -> increased unemployment

Firms may become heavily reliant on demand from foreign buyers which may be effected by other events in the economy.

Over specialisation may occur and diseconomies of scale may be experienced -> increased average costs -> decreased profits

Question 9

Free trade agreements

Answer 9

Free movement of goods and services between countries without any restrictions

Question 10

What do free trade agreements do

Answer 10

They maximise all the benefits of international trade.