Chapter 15 Flashcards
Absolute Advantage
Ability to product same amount of outputs using less resources.
Trading Procedures
Determine comparative advantage
Complete Specialization
Country indifference curve
Both a consumption and production point
Specialization
Production point
World price ratio
Through trading, consumption can be greater than the PPC
Both nations benefit from trade, benefit or suffer?
benefit
The firms and their workers in the exporting industry, benefit or suffer?
benefit
The firms and their workers in the importing industy, benefit or suffer?
suffer
Exporting Nation Pd ? wp CS surplus ? PS surplus ? Total Surplus ?
Pd
importing Nation Pd ? wp CS surplus ? PS surplus ? Total Surplus ?
Pd > wp
CS Increases - Consumer benefits from trade
PS decreases - producers suffer from trade
TS increases - the nation benefits from trade
Embargo
no trade
GATT
no authority to deal with trade disputes
WTO
has the authority to deal with trade disputes
Tariff
Tax on imports
Qd - Qs
shortage = import amount
