Ch. 9 - International Trade Flashcards
What does it mean to Import? Export?
Import - To buy goods or services from foreign sellers
Export - To sell goods or services to foreign buyers
What are Trade Costs?
The extra costs incurred as a result of buying or selling internationally, rather than domestically
What is World Price?
The price that a product sells for in the global market
What is a Domestic Demand Curve? Domestic Supply Curve?
Domestic Demand Curve - Shows the quantity of a good that all domestic consumers added together plan to buy at each price
Domestic Supply Curve - Shows the quantity of good that all domestic suppliers added together plan to buy at each price
What do Imports lead to?
- Lower prices
- Less domestic production
- More domestic consumption
- Raise economic surplus
- Cheap imports raise consumer surplus
- Domestic producers lose producer surplus due to foreign competition
What do exports lead to?
- Higher prices
- More domestic production
- Less Domestic consumption
- Raise economic surplus
- More expensive exports raise producer surplus
- Domestic consumers lose consumer surplus due to foreign competition
What are the 5 Arguments for Limiting International Trade?
- National Security requires that we produce strategically important goals ourselves
- Protection can help infant industries develop
- Anti-dumping laws prevent unfair competition
- Trade shouldn’t be a way to skirt regulations
- Foreign competition may lead to job losses
What are Tariffs? What effect do they have?
A tax on imported goods
- Raises cost, does not raise revenue (only for governments)
What are Import Quotas?
A limit on the quantity of a good that can be imported
What is Globalization?
The increasingly economic, political, and cultural integration of different countries
What is Autarky?
No Trade
