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30 Cards in this Set
- Front
- Back
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Market participants |
Trying to obtain the maximum return the scarce resources they have |
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Consumers maximize maximize |
Maximize utility they get from available incomes |
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Businesses maximize |
Profits by selling Goods that satisfy and keeping costs low |
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Government maximize |
General welfare of society |
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Import and Export location |
The location of the transaction is entirely irrelevant |
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Does America export? |
America and Germany compete for second in World exports each year |
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Trade balance equals |
Exports minus Imports |
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Trade deficit |
Negative trade balance |
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Trade Surplus |
Positive trade balance |
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Terms of trade |
The rate at which goods are exchanged. The amount of good a given up to get good B in exchange |
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USA major export with China |
Chicken feet |
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Comparative advantage |
Specialize in producing that good, ability to produce a good at a lower opportunity cost than others |
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Comparative disadvantage |
Buy the good instead of producing it themselves. |
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Absolute advantage |
Country devoting all their resources to one product |
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Once we open up to international trade, |
You can devote more resources to your specialty |
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Motivation to trade |
Once you open up to international trade, all goods would be produced those who can deliver them with the smallest consumption of resources |
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Results of trading |
Produce more with fewer resources consumed Greater total output Satisfy more wants and needs Higher standard of living in all trading companies |
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Open economy |
International trade exist. Consumption possibilities can exceed it's production possibilities |
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Adam Smith |
Families should not produce for themselves that what is cheaper for them to buy |
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Motivation to trade |
If specialization and trade took place, all Goods would be produced by those who can deliver them with the smallest consumption of resources |
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Results of trading |
Produce more with fewer resources consumed Greater total output satisfy their wants and needs Higher standard of living in all trading countries |
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Closed economy |
No International Trade. The consumption possibilities in each Country Must equal its production possibilities The consumption possibilities in each Country Must equal its production possibilities |
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Dumping |
Importers are selling Goods at prices below what they charge here. So we get them cheap. This is a problem to the competing firm |
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Infant industries |
Imported goods make it in for us from the start up. Costs are high at start up, so low-cost Imports will kill the business at Birth. |
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embargo |
A Prohibition on imported goods. Highly effective |
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Tariff |
A tax imposed on imported good. Reduces competition between imported and domestic competitors |
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Quota |
On the quantity of a good allowed to be imported period pushes the supply curve left raising the price of the import . reduces the competition between domestic and imported goods |
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Barriers to trade |
International Trade decreases standard of living Falls in both countries Total output is produced in the world Free trade reduces prices and increases production and consumptionTariffs Tariffs and quotas raise prices to Consumers and decreased production and consumption |
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Voluntary Restraint agreement |
Two countries agreed to reduce the volume of trade |
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Non-tariff barriers |
Use of standards and restrictive regulations to deter the qualification of products to be imported |
