Trade Flashcards
1
Q
Why trade matters?
A
- 1 in 5 jobs is linked to exports
- export companies pay better and have better working conditions
- Imports provide jobs in service sector
- Increases the range of goods we have access to at lower prices
2
Q
Absolute Advantage
A
Most efficient at producing that product. Countries with absolute advantage should specialise in that product.
3
Q
Comparative Advantage
A
Specialise in the product with lowest opportunity cost.
4
Q
Why do we trade?
A
- Jobs
- Specialisation - produce what you are good at
- Lower price
- Greater choice
- Difference in resources - factors of production
- Improved services and infrastructure
- Economics of scale - lower average unit cost
- Increased competition - better for consumers
- Innovation - better for consumers
