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26 Cards in this Set
- Front
- Back
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What is the Law of Supply and Demand?
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The law of supply and demand states that the price of a good or service adjusts until the amount producers are willing to produce equals the amount consumers are willing to consume.
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What is Demand?
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Demand is the quantity of goods and services that consumers are willing to purchase at various prices.
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What is Supply?
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Supply is the amount of a good or service offered for sale.
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What is the Law of Demand?
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The law of demand states that as the price of a good increases, the quantity of the good demanded falls.
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What is the Law of Supply?
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The law of supply states that as the price of a good rises, producers are willing to supply more of the good.
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What is the formula for Equilibrium Price?
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Q.D. = Q.S.
Quantitative Demand = Quantitative Supply |
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What is the business cycle?
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The business cycle is expansion and contraction by many industries at once.
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When does economic expansion occur?
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Economic expansion occurs when consumer spending is strong and companies invest in new factories and equipment.
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When does economic contraction occur?
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Economic contraction occurs when consumers reduce their purchases and business investment slows.
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What is international trade?
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International trade consists of the exchange of goods and services between different countries.
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What are exports?
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Exports are goods and services that are sold abroad.
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What are imports?
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Imports are goods and services that are purchased abroad.
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Why do we need protectionism?
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Some companies may have extreme advantages that could drive competition out of business.
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What is an Embargo?
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An embargo is the partial or complete prohibition of trade with a specific country.
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What is a Tariff?
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A tariff is a tax placed on imported goods.
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What is a Quota?
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A quota is a physical limit on the amount of goods that can be imported.
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What is an absolute advantage?
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An absolute advantage is the ability to produce more of a good than another producer with the same quantity of inputs.
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What are inputs?
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Land, Labor, and Capital.
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What is comparative advantage?
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Not having an absolute advantage doesn't prevent a country from engaging in international trade.
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What is the balance of trade?
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The difference between the value of the goods a country exports and the value of the goods it imports.
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When does a trade surplus occur?
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A trade surplus occurs when a country exports more than it imports.
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When does a trade deficit occur?
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A trade deficit occurs when a country imports more than it exports.
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What is a free trade area?
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A free trade area is a region within which trade restrictions are reduced or eliminated.
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What is the largest free trade area in the world and what does it stand for?
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N.A.F.T.A. (North American Free Trade Agreement).
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What is a multinational corporation?
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A multinational corporation is a company that has made a financial commitment to establish manufacturing and distribution facilities in a foreign territory.
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Why would a company become a multinational corporation?
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Lower labor costs; Oppurtunity to sell products/services abroad.
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