Econ 556 - Midterm 1

Front 1

agreement that was formed after WW2 to reduce the barriers, tariffs and subsidies on trade that is now replaced w/ the WTO

Back 1

GATT

Front 2

consumer surplus

Back 2

the difference between the amount that a consumer actually pays for a good and the amount that they were willing to pay for it

Front 3

four costs of transportation

Back 3

1- tariff
2- transportation
3- transaction
4- time

Front 4

weight-gaining industries

Back 4

industries that manufacture products that gain weight as theyre produced
- ex: Coke syrup to Coke bottles

Front 5

5 gains from trade

Back 5

1- comparative advantage
2- comparative ability of factors of production
3- innovation and technology transfer
4- preferences for variety & economies of scale
5- differences in preferences & endowments

Front 6

producer surplus

Back 6

amount that producers benefit from selling a good at a market price that is more than theyd be willing to sell it for

Front 7

3 degrees of economic integration

Back 7

1- free trade area -> tariff barriers reduced among member countries
2- customs union -> same as above but tariffs placed on non-member countries
3- economic union -> free trade of people, goods, services and capital

Front 8

weight-losing industries

Back 8

companies that manufacture products that lose weight as theyre manufactured, production that takes place near the source of the raw materials
- ex: coal

Front 9

footloose industries

Back 9

industries that can be placed anywhere w/o having any effect on factors such as resources or transportation
- ex: diamonds, computer chips