Unit 3 Chapter 3

Question 0

Commodities

Answer 0

Raw materials or semi-manufactured products that are traded in bulk and are not recognisably originating from any particular business. Examples include iron ore, cotton, wheat and oil.

Question 1

Human Development Index

Answer 1

Constructed by the United Nations Development Program and provides a measure of development based on access to health care and education as well as national income. It therefore includes qualitative as well as quantitative aspects of development.

Question 2

Infrastructure

Answer 2

All transport and communication facilities as well as the provision of basic services such as energy and water supplies. Examples include telephone systems and ports, as well as roads, power stations and drains.

Question 3

Specialisation

Answer 3

Means that people or an economy make the most of their skills by concentrating on what they do best. As an appropriately skilled person produces more, output per head rises. This only works when people or economies are in a position to trade their output for things they need but do not produce.

Question 4

Absolute advantage

Answer 4

This exists if the real resource cost of a product is lower in one country than another.

Question 5

Theory of competitive advantage

Answer 5

If two countries each specialise in the product with the lowest opportunity cost, and then trade, real incomes will increase for both countries.