Principles of Economics chapter 5 Flashcards
What are imports and exports
Goods and services purchased from other countries are imports; goods and services sold to other countries are exports.
What is globalization
Globalization is the phenomenon of growing economic linkages among countries.
What is hyperglobalization
Hyperglobalization is the phenomenon of extremely high levels of international trade.
What does the Ricardian model of international trade analyze
The Ricardian model of international trade analyzes international trade under the assumption that opportunity costs are constant.
What is autarky
Autarky is a situation in which a country does not trade with other countries.
What is factory intensity
The factor intensity of a good is a measure of which factor is used in relatively greater quantities than other factors in production.
What is the Heckscher-Olin model
According to the Heckscher–Ohlin model, a country has a comparative advantage in a good whose production is intensive in the factors that are abundantly available in that
country.
What does the domestic demand curve show
The domestic demand curve shows how the quantity of a good demanded by domestic consumers depends on the price of that good.
What does the domestic supply curve show
The domestic supply curve shows how the quantity of a good supplied by domestic producers depends on the price of that good.
What is the world price
The world price of a good is the price at which that good can be bought or sold abroad.
What are exporting industries
Exporting industries produce goods and services that are sold abroad.
What are impport-competing industries
Import-competing industries produce goods and services that are also imported.
When does an economy have free trade
An economy has free trade when the government does not attempt either to reduce or to increase the levels of exports and imports that occur naturally as a result of supply and demand.
What is trade protection/protection
Policies that limit imports are known as trade protection or simply as protection.
What is a tariff
A tariff is a tax levied on imports.
What is an import quota
An import quota is a legal limit on the quantity of a good that can be imported.
What are international trade agreements
International trade agreements are treaties in which a country promises to engage in less trade protection against the exports of other countries in return for a promise by
other countries to do the same for its own exports.
What is a trade war
In a trade war, countries deliberately try to impose pain on their trading partners, as a way to extract policy concessions.
What is the North American Free Trade Agreement, or NAFTA, NAFTA-USMCA
The North American Free Trade Agreement, or NAFTA, is a trade agreement among the United States, Canada, and Mexico. The current version of the agreement is NAFTA-
USMCA.
What is the European Union/EU
The European Union, or EU, is a customs union among 27 European nations.
What is the World Trade Organization/ WTO
The World Trade Organization, or WTO, oversees international trade agreements and rules on disputes between countries over those agreements.
When does offshore outsourcing take place
Offshore outsourcing takes place when businesses hire people in another country to perform various tasks.
What is a consumer´s willingness to pay
A consumer’s willingness to pay for a good is the maximum price at which they would buy that good.
What is the individual consumer surplus
Individual consumer surplus is the net gain to an individual buyer from the purchase of a good. It is equal to the difference between the buyer’s willingness to pay and the
price paid.
What is the total consumer surplus
Total consumer surplus is the sum of the individual consumer surpluses of all the buyers of a good in a market.
What is meant by the term consumer surplus
The term consumer surplus is often used to refer both to individual and to total
consumer surplus.
What is the individual producer surplus
Individual producer surplus is the net gain to an individual seller from selling a good. It is equal to the difference between the price received and the seller’s cost.
What is the total producer surplus
Total producer surplus is the sum of the individual producer surpluses of all the sellers of a good in a market.
What is meant by the term producer surplus
Economists use the term producer surplus to refer both to individual and to total producer surplus.
What is the total surplus
The total surplus generated in a market is the total net gain to consumers and producers from trading in the market. It is the sum of the producer and the consumer surplus.
