ch 14 final exam Flashcards
costs of international trade
take away US jobs, and not always benefitting producer
benefits of trade
everyone can gain from it, specialization, faster production; obtain more goods; vARIETY OF GOODS
process of producing the best product one can; narrow area of expertise to one area compared to multiple crafts; higher level of efficiency
specialization
a person (or country) can make more of someything; better at producing one thing
absolute advantage
one has a lower opportunity cost when giving up something; giving up fewer goods in order to make something else
comparative advantage
how can the PPF be used to look at comparative and absolute advantages?
The PPF compares how many goods a person can produce with a given input.
when all inputs are doubled, output more than doubles
economies of scale
what can trade do to the PPF?
Trade can help each state achieve a point beyond its PPF; comparative advantage will lead to specialization allowing more states to focus on one product which with encourage trade and increase overall production; points move the middle of the PPF to the end
importing more than exporting
trade deficit
What are some objections to free trade
- ) low wage workers will unfairly compete with workers in the US - ruins jobs for US workers
- ) some people take many costs in order for everyone to benefit
what does trade increase for individuals
standard of living
what influences low wages?
Labor laws in a country
a tax or duty on an imported good that is expressed either as a fixed amount or fixed percentage of the value of the imported product
tariff
how are tariffs good in a sense for the us economy
tariffs can encourage people to not buy imports, therefore increasing the prices of US goods but improving US supply and employment
limits on the amounts that can be imported
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