economics Flashcards
Define Absolute Advantage.
The ability of an individual or group to carry out an economic activity more effectively and efficiently than an opposer.
Define Comparative Advantage.
The ability of an individual or group to produce goods and services with a lower opportunity cost than an opposer.
Define Trade Laterization.
An act to remove restrictions of international trade
Define Protectionism.
An act to restrict international trade.
Define a Tariff
A tax imposed on imported goods (decreases the quantity of imports, higher domestic products.
Define a Subsidy.
A subsidy is paid to domestic producers to reduce overall production costs and allow them to be more competitive with foreign producers.
Benefits of Trade Laterization.
Wider product range, promote regional economic integration, enhanced trade/investment opportunities, stronger foreign relationships, expanded market.
Benefits for Protection.
Anti-dumping (lower international prices effecting domestic producers), national security, increased employment.
State some sources (effectors) of comparative advantage:
wage costs and labor supply, research and development, exchange rates, free trade agreements, the ability to benefit from economies of a scale.
Fully draw and label a tariff graph:
Fully draw and label a subsidy graph
Fully draw and label a specialization and trade graph (PPF)
Use a supply and demand graph to show gains from trade: EXPORTS
Use a supply and demand graph to show gains from trade: IMPORTS.
Explain a Bilateral FTA:
- Two participants
- aims to reduce trade restrictions
- enhance economic co-operation
Explain a Multilateral FTA:
- Multiple countries
- aims to reduce trade restrictions
- promotion of economic integration.
