Chapters 8-10 Vocab

Front 1

antidumping duty

Back 1

p. 281 A tariff applied against the Foreign discriminating monopoly

Front 2

Common Agricultural Policy (CAP)

Back 2

p. 327 Europe maintains a system of agricultural subsidies

Front 3

consumer surplus

Back 3

p. 240 This region measures the satisfaction that consumers receive from the purchased quantity D1 that they have paid.

Front 4

consumption loss

Back 4

p. 250 The area of the triangle d can be interpreted as the drop in consumer surplus for those individuals who are no longer able to consume the units between D1 and D2 because of the higher price. We refer to this drop in consumer surplus as the consumption loss for the economy

Front 5

consumption loss

Back 5

p. 333 the drop in consumer surplus for those individuals no longer consuming the units between D1 and D2

Front 6

customs unions

Back 6

p. 240 which are free-trade areas in which the countries also adopt identical tariffs between themselves and the rest of the world.

Front 7

deadweight loss

Back 7

p. 249 is the net welfare loss in a small importing country due to the tariff; meaning that it is not offset by a gain elsewhere in the economy.

Front 8

deadweight loss

Back 8

p. 332 In economics, a deadweight loss (also known as excess burden or allocative inefficiency) is a loss of economic efficiency that can occur when equilibrium for a good or service is not Pareto optimal. In other words, either people who would have more marginal benefit than marginal cost are not buying the product, or people who have more marginal cost than marginal benefit are buying the product.

Front 9

discriminating monopoly

Back 9

p. 281 we assume that the monopolist is able to charge different prices in the two markets; this market structure is sometimes called

Front 10

discriminating monopoly

Back 10

p. 296 we assume that the monopolist is able to charge different prices in the two markets; this market structure is sometimes called

Front 11

dispute settlement procedure

Back 11

p. 255 under which countries that believe that the WTO rules have not been followed can bring their complaint and have it evaluated.

Front 12

domestic farm supports

Back 12

p. 328 which refers to any assistance given to farmers, even if it is not directly tied to exports. Such domestic assistance programs can still have an indirect effect on exports by lowering the costs (and hence augmenting the competitiveness) of domestic products.

Front 13

dumping

Back 13

p. 239 the sale of export goods in another country at a price less than that charged at home, or alternatively, at a price less than costs of production and shipping. Article VI of the GATT states that an importing country may impose a tariff on goods being dumped into its country by a foreign exporter.

Front 14

dumping

Back 14

p. 281 A specific example of a Foreign monopolist is the Foreign discriminating monopoly, which charges a lower price to Home than to firms in its own local market and is therefore dumping its product into the Home market

Front 15

duopoly

Back 15

p. 343 is a specific type of oligopoly where only two producers exist in one market. In reality, this definition is generally used where only two firms have dominant control over a market.

Front 16

equivalent import tariff

Back 16

p. 266 that would lead to the same Home price and quantity of imports.

Front 17

escape clause

Back 17

p. 240 Countries can temporarily raise tariffs for certain products under such conditions as to cause or threaten serious injury to domestic producers.”

Front 18

export subsidies

Back 18

p. 239 benefits such as tax breaks or other incentives for firms that produce goods specifically for export.

Front 19

export subsidy

Back 19

p. 327 is payment to firms for every unit exported (either a fixed amount or a fraction of the sales price). Governments give subsidies to encourage domestic firms to produce more in particular industries.

Front 20

externality

Back 20

p. 305 A second case in which import protection is potentially justified is when a tariff in one period leads to an increase in output and reductions in future costs for other firms in the industry

Front 21

externality

Back 21

p. 342 In economics, an externality, or transaction spillover, is a cost or benefit that is not transmitted through prices[1] and is incurred by a party who was not involved as either a buyer or seller of the goods or services causing the cost or benefit

Front 22

first mover advantage

Back 22

p. 345 which means that one firm is able to decide whether or not to produce before the other firm.

Front 23

free-trade areas

Back 23

p. 240 in which a group of countries voluntarily agrees to remove trade barriers between themselves

Front 24

game theory

Back 24

p. 343 the modeling of strategic interactions (games) between firms as they choose actions that will maximize their returns.

Front 25

imperfect competition

Back 25

p. 343 n economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. It is a market structure that does not meet the conditions of perfect competition.

Front 26

import demand curve

Back 26

p. 245 shows the relationship between the world price of a good and the quantity of imports demanded by Home consumers.

Front 27

import quota

Back 27

p. 238 are a restriction on the amount of a particular good that one country can purchase from another country.

Front 28

import tariff

Back 28

p. 238 taxes on imports

Front 29

indirect subsidies

Back 29

p. 328 Included in the Hong Kong export subsidy agreement is the parallel elimination of indirect subsidies to agriculture, including food aid from developed to poor countries and other exports by state-sponsored trading companies in advanced countries.

Front 30

infant industry

Back 30

p. 281 an industry that is too young to have achieved its lowest costs

Front 31

knowledge spillover

Back 31

p. 305 firms to mimic the successful innovations of other firms

Front 32

large country

Back 32

p. 257 large enough importing country

Front 33

marginal revenue

Back 33

p. 282 The extra revenue earned from selling one more unit

Front 34

market failure

Back 34

p. 305 is a concept within economic theory describing when the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off. (The outcome is not Pareto optimal.) Market failures can be viewed as scenarios where individuals' pursuit of pure self-interest leads to results that are not efficient – that can be improved upon from the societal point-of-view.[1][2] The first known use of the term by economists was in 1958,[3] but the concept has been traced back to the Victorian philosopher Henry Sidgwick

Front 35

market power

Back 35

p. 281 the extent to which a firm can choose its price.

Front 36

Multifibre Arrangement (MFA)

Back 36

p. 263 On January 1, 2005, China was poised to become the world’s largest exporter of textiles and apparel. On that date, a system of worldwide import quotas known as the Multifibre Arrangement (MFA) was abolished

Front 37

Nash equilibrium

Back 37

p. 344 is that each firm must make its own best decision, taking as given each possible action of the rival firm. When each firm is acting that way, the outcome of the game is a Nash equilibrium. That is, the action of each player is the best possible response to the action of the other player.

Front 38

optimal tariff

Back 38

p. 260 the tariff that leads to the maximum increase in welfare for the importing country.

Front 39

payoff matrix

Back 39

p. 343 A payoff matrix is a decision analysis tool that summarizes pros and cons of a decision in a tabular form. It lists payoffs (negative or positive returns) associated with all possible combinations of alternative actions (under the decision maker's control) and external conditions (not under decision maker's control). Also called payoff table.

Front 40

price discrimination

Back 40

p. 296 With international tradewe extend this idea: not only can firms charge a price that is higher than their marginal cost, they can also choose to charge different prices in their domestic market than in their export market.

Front 41

producer surplus

Back 41

p. 240 is that it equals the return to fixed factors of production in the industry.

Front 42

production loss

Back 42

p. 249 The area of triangle b equals the increase in marginal costs for the extra units produced and can be interpreted as the production loss (or the efficiency loss) for the economy due to producing at marginal costs above the world price.

Front 43

production loss

Back 43

p. 332 The triangle d equals the increase in marginal costs for the extra units produced because of the subsidy and can be interpreted as the production loss or the efficiency loss for the economy.

Front 44

production subsidy

Back 44

p. 338 uppose the government provides a subsidy of s dollars for every unit (e.g., ton of sugar in our example) that a Home firm produces.

Front 45

quota licenses

Back 45

p. 267 permits to import the quantity allowed under the quota system

Front 46

quota rents

Back 46

p. 267 " Quota rent refers to the economic benefit a right or license holder gets from selling an item on which a quota has been imposed.

Front 47

regional trade agreements

Back 47

p. 240 are permitted under Article XXIV of the GATT. The GATT recognizes the ability of blocs of countries to form two types of regional trade agreements: free-trade areas & customs unions

Front 48

rent seeking

Back 48

p. 267 "Alternatively firms might engage in bribery or other lobbying activities to obtain the licenses. These kinds of inefficient activities done to obtain quota license

Front 49

safeguard provision

Back 49

p. 240 Countries can temporarily raise tariffs for certain products under such conditions as to cause or threaten serious injury to domestic producers.”

Front 50

safeguard tariff

Back 50

p. 300 A member may take a “safeguard” action (e.g. restrict importation of a product temporarily) to protect a specific domestic industry from an increase in imports of any product which is causing, or which is threatening to cause, serious injury to the domestic industry that produces like or directly competitive products.

Front 51

small country

Back 51

p. 243 We will suppose that the Home country is a small country, by which we mean that it is small in comparison with all the other countries buying and selling this product. For that reason, Home will be a price taker in the world market: it faces the fixed world price ofPW, and its own level of demand and supply for this product has no influence on the world price.

Front 52

strategic advantage

Back 52

p. 342 we mean that the subsidized industry can compete more effectively with its rivals on the world market.

Front 53

strategic trade policy

Back 53

p. 280 " was that government trade policies could give a strategic advantage to

Front 54

targeting principle

Back 54

p. 341 to achieve some objective, it is best to use the policy instrument that achieves the objective most
directly.

Front 55

tariff war

Back 55

p. 255 "An economic battle between two countries in which Country A raises tax rates on Country B's exports

One reason why a country might incite a tariff war is because it is unhappy with one of its trading partners' political decisions. It hopes that by putting enough economic pressure on the country it can force a change in the opposing government's behavior. This type of tariff war is also known as a ""customs war""."

Front 56

terms of trade

Back 56

p. 259 " as the ratio of export prices to import prices. Generally

Front 57

terms of trade

Back 57

p. 334 the ratio of export prices to import prices.

Front 58

terms-of-trade gain

Back 58

p. 260

Front 59

trade policy

Back 59

p. 238 a government action meant to influence the amount of international trade

Front 60

voluntary” export restraint (VER)

Back 60

p. 268 Because the exporting country allocates the quota among its own producers

Front 61

voluntary” restraint agreement (VRA)

Back 61

p. 268 Because the exporting country allocates the quota among its own producers