Chapter 19 Flashcards
What benefits do specialization and free trade provide?
Benefit all trading partners
What does a straight PPF indicate?
Constant opportunity costs.
What does trade allow countries to do?
Take advantage of lower opportunity costs
What is a key distinction between intra-industry trade and traditional comparative advantage theories?
Productivity is not determined by climate, geography, or general education.
Why does division of labor increase output?
3 reasons: specialization, productivity, economies of scale
What is the impact of 100% specialization?
Increases total world production.
What does the division of labor lead to?
Learning, innovation, and unique skills
What has grown dramatically in recent decades?
International trade
What does international trade often involve?
Specialized goods
What is the key reason trade occurs?
Comparative advantage
What does intra-industry trade allow?
Learning and innovation
WTO’s goal?
Lower barriers to trade
What is trade about?
Mutually beneficial exchange
What is the current round of WTO negotiations called?
Doha Round
What halted the first wave of globalization?
World War I
