Trade

Question 1

what does PPF stand for

Answer 1

production possibilities frontier

Question 2

what does the ppf show

Answer 2

a graphical representation of 2 goods that can be produced by diverting resources from one good to another

Question 3

what is a comparative advantage

Answer 3

when the opportunity cost of producing a good is lower than another country

Question 4

is it possible for a country to be able to produce more of a good but still lack comparative advantage

Answer 4

yes
eg germany technically has more resources and could produce more pharmaceutical goods than ireland but this would mean they’d have to allocate those resources away from a market their even more productive in eg car manufacturing

Question 5

after beginning to export a good, is the world price higher or lower than the domestic price

Answer 5

higher

Question 6

how does opening up to trade make a country more efficient

Answer 6

with trade, extra surplus is created that didn’t belong to either consumers or producers before

Question 7

who gains more from exporting, consumers or producers

Answer 7

producers as there is more demand for their product

consumers have a higher price

Question 8

who gains more from importing, consumers or producers

Answer 8

consumers as they gain lower prices from imported goods

producers domestically find it hard to compete with world prices

Question 9

after beginning to import, is the world price higher or lower than the domestic price

Answer 9

lower

Question 10

why would a country want to have trade policy

Answer 10

to protect domestic producers eg farmers

Question 11

types of restrictive trade policy

Answer 11

tariffs
quotas
other non tariff barriers

Question 12

example of trade policy used in past

Answer 12

by US and UK to create successful industries

Question 13

what does WTO stand for

Answer 13

world trade organisation

Question 14

what is half of all irish exports made up of

Answer 14

chemicals and computer services

Question 15

up to what % does US apply tariffs on Chinese products

Answer 15

25%

Question 16

benefit of free trade

Answer 16

increases economic output and income

Question 17

how to calculate the opportunity cost of good X

Answer 17

sacrifice in good X / gain in good Y

Question 18

describe the shape of the ppf

Answer 18

bowed outwards in shape

Question 19

which is the most efficient part of the ppf

Answer 19

most outmost part

Question 20

when can the ppf curve shift

Answer 20

when theres more productive technology

when theres more education = more productive labour force

Question 21

who has an absolute advantage

Answer 21

whichever producer can produce using fewer inputs than the other

Question 22

who has a competitive advantage

Answer 22

whichever producer has the lowest opportunity cost

Question 23

what is specialisation

Answer 23

when each country concentrates on the product that they have the least opportunity cost

Question 24

why does china have a great comparative advantage

Answer 24

extremely cheap labour

Question 25

as China's labour force become more aware of their low labour costs and demand higher wages, how will China maintain their competitive advantage

Answer 25

through investing in technology and innovation to make production costs as cheap as possible

Question 26

if the domestic price of a good is less than the world price, what should the country do

Answer 26

export their good | they have comparative advantage

Question 27

if the domestic price of a good is greater than the world price, what should the country do

Answer 27

import the good

Question 28

what is a tariff

Answer 28

tax on good produced abroad and sold domesticallly

Question 29

what is a quota

Answer 29

limit of a good produced abroad and sold domestically

Question 30

other barriers that arent tariffs or quoats

Answer 30

complex or discriminatory rules on origin and quality sanitary conditions administrative regulations currency manipulation

Question 31

benefits of trade

Answer 31

``` increased variety of goods lower costs increased competition enhanced flow of ideas and innovation economic growth ```

Question 32

arguments to restrict trade

Answer 32

domestic job loss national security infant industries and older industries unfair competition

Question 33

what is a net exporter

Answer 33

a country who exports more than they import eg USA

Question 34

What is a net imprter

Answer 34

a country who imports more than they export eg Ireland

Question 35

benefits of trade barriers

Answer 35

``` protect domestic industries health reasons enviornmental reasons prevent unfair competition decrease reliance on supply chains ```

Question 36

disadantages of trade barriers

Answer 36

``` less choice for consumers higher prices for consumers black markets may establish lower demand, unemployment drop in productivity ```

Question 37

ireland has the highest tariffs on what products

Answer 37

sugar beet why mushrooms milk

Question 38

how can AD be boosted by trade

Answer 38

nx increases c increases as more goods available i could boost with foreign investment

Question 39

how can LRAS be shifted by trade

Answer 39

higher output and lower prices shifts LRAS Also foreign investment changes capital New innovation and technologies can be introduced

Question 40

if an industry is present in many markets worldwide, will fluctuations be less or more intens

Answer 40

less as one individual country wont have a huge impact

Question 41

why can trade be great for smaller countries

Answer 41

cooperation and good established relationships with the larger countries can be beneficial (less likely to have wars)