International Economics: International Trade

Front

What is international trade?

Back

Voluntary exchange of G/S between individuals and businesses of different nations

Front

What is absolute advantage?

Back

ability to produce more of a good with less input, using available FOP, than another country

Front

What is the Law of Comparative Advantage?

Back

producing items a country is most efficient at producing with the lowest opportunity cost, ability to produce a good or service at a lower opportunity cost than competitors, ability to produce a good or service at a lower opportunity cost than other countries

Front

What is the difference between comparative advantage and absolute advantage?

Back

Nations with comparative advantage specialize in the production of goods for which they have a lower opportunity cost.

Front

Who is credited with the concept of the Law of Comparative Advantage?

Back

David Ricardo

Front

Why is a nation is better off when it produces goods for which it has a comparative advantage?

Back

It produces those goods more efficiently & can trade for items for which it has no comparative advantage.

Front

Why do individuals, businesses, and governments trade goods and services?

Back

no nation can produce all the G/S it needs/wants

Front

What happens when a nation's currency depreciates?

Back

products are less expensive to other countries

Front

Flexible exchange rates

Back

are based on demand & supply, change daily, can appreciate or depreciate against other currencies.

Front

The country of Udabi specializes in producing tegwits because

Back

Udabi produces tegwits because of its available FOP which gives it an Absolute Advantage