TRADE definitions

factor endowments

the quantity and quality of a country’s factors of production

specialisation

when a country focuses on producing the goods and services it can produce relatively efficiently, and trades with other countries for the goods and services it does not specialise in

free trade agreement

agreements between countries to remove or reduce barriers to trade

protectionism

government policies that restrict imports to protect domestic producers from foreign competition

price taker

a producer or country that has no control over the market price and must accept the price determined by the world market

trade

The exchange of goods and services between countries