4.1.2 International trade and business growth

Question 1

what is international trade?

Answer 1

the exchange of capital goods and services across international boarders or territories

(the process of exporting (selling abroad) and importing (buying abroad))

Question 2

what is an import?

Answer 2

goods that are made in specific countries and brought into another country

Question 3

what is an export?

Answer 3

goods manufactured in a domestic country and sold abroad

Question 4

what factors affect international trade?

Answer 4

-exchange rates
-globalisation
-cost
-customs
-outsourcing
-tariffs
-time zones
-laws
-freight

Question 5

what is competitive advantage?

Answer 5

the ability of a firm to produce goods and services that are unique
(can be done through cost advantage or differentiation)

Question 6

what is comparative advantage?

Answer 6

the ability of a country to produce goods and services at a lower opportunity cost than other firms
(done through specialisation)

Question 7

what are the benefits of specialisation?

Answer 7

-increased productivity and output
(reduced average costs and EOS)
-comparative advantage over the next best country
-higher GDP growth -> increased sales -> higher economic growth