Chapter 5 component 3 international trade Flashcards
International trade
Consists of buying and selling of exports and imports between countries
Reasons for international trade
Wider consumer demand
Increased competition
Opportunities for business growth
Lower costs for a business
Trading blocs
Availability of resources
Advantages international trade
Wider choice for consumers
Increased employment
Increased competition lowers quality
Disadvantages of international trade
Competition
Transport pollution
Over reliance on other countries
Free trade
International trade conducted without the existence of barriers to trade such as tariffs and quotas
Single market
Like free trade area but also free movement of goods,services,capital and people and a common external tariff on goods entering the single market
Advantages of free trade
Allows economies of scale so reduce costs
Increases choice for consumers
Increases competition increasing quality and reducing prices
Employment
Protectionism
Restrains trade between countries through imposition of barriers to trade such as tariffs or quotas
Reasons why protectionism exists
Protect domestic industries
Protect domestic employment
Prevent dumping
What is dumping
Selling of goods to make a loss to drive domestic producers out of business to gain benefits from monopoly power
Tariffs
Tax on imported goods
Quotas
Limit on quantity of good imported
VER
Quota put in place by exporters
Non competitive purchasing by governments
Gov only buying from domestic producers even if it means paying higher prices
Embargos
Complete or partial prohibition of commerce and trade with a particular country to isolate it
