Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

16 Cards in this Set

  • Front
  • Back
For what 3 reasons do nations trade?
1) Differences in endowments of economic resources
2) Different technologies/combinations of resources
3) Differences in international quality
What are examples of labor-intensive goods?
Digital cameras, video game players, DVD players (large design and production needs)
What are examples of land-intensive goods?
Wheat, wool, meat (Need suitable environment for optimal preparation)
What are examples of capital-intensive goods?
Automobiles, chemicals, machinery (Fairly expensive ingredients)
What does international trade enable nations to do?
1) Specialization -Larger outputs of products and more efficient usage of world resources
Comparitive Advantage allows Total World Output to be at its greatest when?
Each good is produced by the nation that has the lowest domestic opportunity cost.
Problem with specialization among nations?
Opoprtunity costs rise as nations produce more of a particular good
Domestic price?
Price prevailing in a closed economy (aka no international trade)
What are tariffs?
Excise taxes on imported goods
Revenue tariff?
· Tariff designed to produce income for the Federal government
· Usually applied to product produced domestically
Protective Tariff?
· Tariff designed to shield domestic producers of G+S from foreign competition
· Do not stop importation of foreign goods but cause serious disadvantage
Import Quota?
Limit imposed by a nation on the quantity of a good that may be imported during some period of time
Nontariff Barrier?
ALL BARRIERS other than protective tariffs erected to impede internationnal trade including license requirements
Voluntary Export Restriction?
Trade Barrier by which Foreign Firms "voluntarily" Limit the Amount of their exports to a particular country.
· Avoids worse tariffs by country
What are four direct effects for a raise in the price of imports b/c of a tariff?
1) Decline in comnsumption (less people actually want the good now)
2) Increased domestic production
3) Decline in imports
4) Tariff revenue (Total revenue x Number of imports
Protection raises the price of a product in what 3 ways?
1) Price of Imported Product goes up
2) Higher Price of imports cause some consumers to shift purchases to higher-priced domestically produced goods
3) Prices of domestically produced goods rise because import competition has declined