why trade Flashcards
What is the definition of international trade?
The exchange of capital, goods and services across international borders or territories.
What allows residents of different countries to specialize in production?
International trade.
What are two reasons trade occurs?
- Specialization in production
- Lower costs from foreign producers.
List three advantages of international trade.
- Increased production
- Production efficiency through specialization
- Wider choices for consumers
List three disadvantages of international trade.
- Structural unemployment may occur
- Dependency on global markets
- Domestic industries may struggle with imports.
What is absolute advantage?
The ability of one person or nation to produce a product at a lower resource cost than another.
Which country has an absolute advantage in producing blueberries according to the provided data?
Country X.
Which country has an absolute advantage in producing pumpkins according to the provided data?
Country Y.
What is comparative advantage?
The ability to produce a good or service at a lower opportunity cost than other producers.
Which country has a comparative advantage in producing blueberries?
Country X.
Which country has a comparative advantage in producing pumpkins?
Country Y.
Fill in the blank: Trade allows countries to consume beyond what they can individually produce at Point ____.
E
True or False: Jack and Charlie should trade with one another based on their specialization.
True.
What is the importance of trade to an economy?
Trade leads to increased production, efficiency, and consumer choices.
What are Free Trade Agreements (FTAs)?
Agreements between countries to reduce trade barriers and increase trade.
What is the impact of specialization on total output?
Total output increases.
What is the opportunity cost for Country X to produce 1kg of blueberries?
0.5kg of pumpkins.
What is the opportunity cost for Country Y to produce 1kg of blueberries?
1.33kg of pumpkins.
What is the significance of the Law of Diminishing Returns in trade models?
It does not apply in the simple model of trade described.
In the example provided, how much can Country X produce if it specializes in blueberries?
240kg.
In the example provided, how much can Country Y produce if it specializes in pumpkins?
300kg.
What happens to domestic industries with an increase in imports?
They may face increased competition.
What is one potential short-term effect of trade?
Structural unemployment.
What is the role of SCORM packages in the lesson schedule?
They are available in LEO2.0 Learning Path for asynchronous learning.
What is the duration of the break in the lesson schedule?
1.5 hours.
What should students submit by 08:00 a.m. the next day?
- Practice Questions
- Reflection Journal
What is comparative advantage?
The ability of a party to produce a particular good or service at a lower opportunity cost than another.
Which country has a comparative advantage in the production of pumpkins?
Country Y, as it has a lower opportunity cost (0.75 < 2).
What should Country X and Country Y do based on their comparative advantages?
They should trade with one another.
What is the opportunity cost of producing a soap bar for Stella?
0.50 organic ciders (25/50).
What is the opportunity cost of producing an organic cider for Sarah?
4.00 soap bars (20/5).
Who should specialize in producing soap bars, Stella or Sarah?
Sarah, since she gives up less units of organic cider than Stella.
What is a Free Trade Agreement (FTA)?
A legally binding agreement between 2 or more countries to reduce or eliminate barriers to trade.
What are Bilateral Trade Agreements?
Agreements signed between two nations at a time, giving favored trading status between each other.
What are Multilateral Trade Agreements?
Agreements signed between many nations at one time.
List two potential benefits of Free Trade Agreements (FTAs).
- Tariff concessions for eligible exports
- Improve market access for committed sectors
What is the main benefit of FTAs for Small-Medium Enterprises (SMEs)?
Give them access to global markets.
True or False: The total trade for the country is 3 times the overall of the country’s GDP.
True.
What organization is designed to supervise and liberalize international trade?
The World Trade Organization (WTO).
What are the objectives of the WTO?
- Administering trade agreements
- Acting as a forum for trade negotiations
- Settling trade disputes
What does opportunity cost refer to?
The best alternative that is foregone when a choice or decision is made.
Match the correct person with their greater comparative advantage: Stella or Sarah?
- Stella – Organic Ciders
- Sarah – Soap Bars
What is the opportunity cost of producing a pumpkin for Country Y?
0.75 kg of blueberries.
Fill in the blank: Comparative advantage refers to the ability of a party to produce a particular good or service at a _______.
lower opportunity cost.
What type of FTAs allow all nations to be treated equally?
Multilateral Trade Agreements.
What is the significance of FTAs for Singapore’s economy?
They play an important role in ensuring Singapore companies gain a competitive edge.
True or False: FTAs have helped to increase Singaporean investments abroad to $200 billion in 2019.
False. The total amount was $930 billion.
What is the role of the WTO in trade agreements?
To provide a framework for negotiating and formalizing trade agreements.
What do FTAs typically aim to remove?
Barriers to trade.
What is the opportunity cost for Sarah to produce one soap bar?
0.25 organic ciders (5/20).
