Unit 6 - International specialisation

Question 1

Specialisation [2]

Answer 1

When a country concentrates on producing a limited range of goods and services in which they’re really efficient at.

Question 2

Advantage for consumers of specialisation [3]

Answer 2

• More g+s available, due to high outputs
• Higher living standards.
• Greater quality, lower priced

Question 3

Disadvantages for consumers of specialisation [1–>1]

Answer 3

• If monopolies form –> High prices

Question 4

Advantages for international specialisation [6]

Answer 4

• EoS (efficiency)
• Job creation
• More international trade
• Revenue to govt <– Taxes
• Wider markets
• Consumer sovereignty

Question 5

Disadvantages for interal specialisation [5]

Answer 5

• Structural unemployment because some industries close
• Over-exploitation of resources –> environmental issues arise
• Threat of foreign competition
• Risk of over-specialisation –> High int. dependance on others
• Strategic vulnerability <–> Political/economic changes impacts

Question 6

Absolute advantage [1]

Answer 6

If a country produces product using fewer resources than others

Question 7

Comparative advantage [1]

Answer 7

If a country can produce its product at a lower opportunity cost

Question 8

Changes in comparative advantage [2]

Answer 8

• Changes as relative costs change
• C.A May occur because new resources discovered

Question 9

TARIFF

Answer 9

Tax on imports

Question 10

Globalisation

Answer 10

• Process –> world becomes increasingly interconnected through trade and other links

Question 11

Globalisation - advantages (3)

Answer 11

• Reduced transport costs
• Advances in communications
• Removal of some trade restrictions

Question 12

Globalisation - disadvantages (3)

Answer 12

• Recession in one country can have impact on other countries
• Government policy constrained
• Loss of jobs

Question 13

MNC - Multi National Companies (DEFINE)

Answer 13

• Business organisation producing in more than one country

Question 14

Benefits of free trade

Answer 14

• No restrictions on products bought by firms and consumers aborad or products sold by firms to other countries and no imposition of special taxes

Question 15

Methods of protection (8)

Answer 15

• A tariff
• A quota
• Embargo
• Exchange control
• Quality standards
• Expensive paperwork
• Voluntary export restraints (VERs)
• Subsidies

Question 16

Quota (DEFINE)

Answer 16

Limit placed on imports or exports

Question 17

Embargo (DEFINE)

Answer 17

A ban on imports or exports

Question 18

Exchange control (DEFINE)

Answer 18

A limit on the amount of foreign currency that can be obtained

Question 19

Voluntary export restraints (VERs) (DEFINE)

Answer 19

Agreements with other governments to restrict their exports to the country

Question 20

Reasons and consequences of protection (7)

Answer 20

Protection of:

• infant industries
• declining industries
• strategic industries
• industries from low wage competition
• industries from dumping
• industries from other forms of unfair foreign competition

and

• Raising employment and improving the trade position