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HSC Economics > Yr 11: Globalisation & Market Failures > Flashcards

Yr 11: Globalisation & Market Failures Flashcards

1
Q

Globalisation refers to…

A

… The process of increased integration between countries, including trade and investment

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2
Q

What is an import?

A

A good or service purchased from another country

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3
Q

What is an export?

A

A good or service sold to another country

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4
Q

A country has a comparative advantage if…

A

It has a lower opportunity cost of producing a product than other countries

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5
Q

Country A can produce 500 cars or 700 tractors. It has an opportunity cost for 1 car of…

A

1.4 tractors

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6
Q

Country A can produce 500 cars or 700 tractors. It has an opportunity cost for 1 tractor of…

A

0.71 cars

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7
Q

Country A can produce 600 cars or 700 tractors. It has an opportunity cost for 1 car of…

A

1.17 tractors

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8
Q

Country A can produce 600 cars or 700 tractors. It has an opportunity cost for 1 tractor of…

A

0.86 cars

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9
Q

Country A can produce 500 cars or 600 tractors. Country B can produce 400 cars or 450 tractors. Country A has a comparative advantage in…

A

Tractors

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10
Q

Country A can produce 500 cars or 600 tractors. Country B can produce 400 cars or 450 tractors. Country B has a comparative advantage in…

A

Cars

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11
Q

Country A can produce 300 cars or 250 tractors. Country B can produce 400 cars or 380 tractors. Country A has a comparative advantage in…

A

Cars

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12
Q

Country A can produce 300 cars or 250 tractors. Country B can produce 400 cars or 380 tractors. Country B has a comparative advantage in…

A

Tractors

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13
Q

Why is free trade good for economic growth?

A

Countries can specialise in what they are efficient at and then trade with other countries for the other products that they want. By producing what they are efficient at, the country can increase the total amount it is able to produce.

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14
Q

What is an advantage of free trade for individuals?

A

Products can be purchased more cheaply from overseas

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15
Q

What is a disadvantage of free trade for individuals?

A

Firms that cannot compete with foreign rivals may make people redundant or even shut down, increasing structural unemployment

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16
Q

Why is foreign investment good for an economy?

A

It provides money for firms to use to fund expansion, leading to increased aggregate supply.

17
Q

Why is foreign investment a risk for an economy?

A

The economy has to continually pay returns (interest or dividends) on foreign investment, and eventually will have to pay the funds back.

18
Q

What are 2 negative impacts of globalisation on the environment?

A

1) Fuel and emissions from transporting goods internationally
2) Firms shift production to countries with weaker environmental laws

19
Q

Is Australia a net borrower from or lender to other countries?

A

A net borrower

20
Q

Australia has about $_____ of gross foreign debt and about $_____ of net foreign debt

A

Australia has about $2 trillion of gross foreign debt and about $1 trillion of net foreign debt

21
Q

Is more of Australia’s foreign debt borrowed by the government or by private firms?

A

Firms

22
Q

A public good is…

A

A product that is non-rival and non-exclusive, so firms may not be paid for supplying the product so are unlikely to make it

23
Q

Non-rival means…

A

When one person consumes the product, it does not affect another person’s consumption of the same product

24
Q

Non-exclusive means…

A

Someone cannot be prevented from consuming the product, even if they didn’t pay for it

25
Q

A free rider is…

A

Someone who uses a product without paying for it

26
Q

A positive externality is…

A

A positive effect of an activity on a third party

27
Q

A negative externality is…

A

A negative effect of an activity on a third party

28
Q

How do you draw a positive externality?

A

An additional demand line to the right labeled ‘marginal social benefit’

29
Q

How do you draw a negative externality?

A

An additional supply line to the left labeled ‘marginal social cost’

30
Q

Why are greenhouse gas emissions a negative externality?

A

When individuals or firms release greenhouse gas emissions from burning fossil fuels, it contributes to climate change which will worsen the severity and frequency of natural disasters for third parties

31
Q

What does it mean to ‘internalise’ an externality?

A

To add a fee (such as a tax) on a product so that the price signal now reflects the full social cost or benefit of the product including the externality

32
Q

Is a street light a public good?

A

Yes

33
Q

Is a public bus a public good?

A

No - it is both rival and exclusive

34
Q

Is a park a public good?

A

No - it is both rival and exclusive

35
Q

Is a library a public good?

A

No - it is both rival and exclusive

36
Q

Is Netflix a public good?

A

No - it is exclusive

37
Q

Is a road a public good?

A

No - it is both rival and exclusive

HSC Economics (39 decks)

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