Benefits of International Trade Flashcards
1
Q
What is international trade?
A
The exchange of goods or services between countries.
2
Q
What is free trade?
A
Trade without government intervention.
3
Q
State 3 advantages of free trade.
A
Greater choice
Lower prices
Acquisition of resources
4
Q
What are the sources of comparative advantage?
A
Natural resources
Labour force
Technology
5
Q
What are the limitations of the theory of comparative advantage?
A
Over-dependence
Structural unemployment
Flawed assumptions
6
Q
What are the assumptions of the theory of comparative advantage?
A
Two countries
Two goods
No transport costs
