International Trade and Economic Principles

These flashcards cover key terms and concepts related to international trade, comparative advantages, protectionist policies, and economic principles.

Absolute Advantage

The ability of a country to produce more of a good per unit of input than another country.

Comparative Advantage

The ability of a country to produce a good at a lower opportunity cost than another country.

Production Possibilities Curve (PPC)

A curve that shows all the possible combinations of two goods that can be produced with fixed resources.

Opportunity Cost

The value of the next best alternative that is given up when making a choice.

Specialization

The process in which individuals or countries focus on producing a limited variety of goods to gain efficiency.

Terms of Trade

The rate at which one good can be exchanged for another in trade.

Two-Way Trade

International trade where countries both import and export the same or similar goods.

Protectionist Policy

A governmental policy that restricts international trade to help domestic industries.

Tariff

A tax imposed on imported goods to increase their price and protect domestic industries.

Quota

A limitation on the quantity of a good that can be imported during a specified period.

Antidumping Measures

Actions taken to protect domestic industries from foreign companies selling products below cost.

Infant Industry Argument

The justification for protectionist measures to allow new industries to develop without competition.

Voluntary Export Restriction

An agreement between countries to limit the quantity of goods exported to avoid trade conflicts.

Monopolistic Competition

A market structure where many firms sell similar but not identical products.

Economies of Scale

The cost advantages that enterprises obtain due to scale of operation.

Government Aid

Support from the government to help certain industries or sectors develop or compete.

Labor Market Dynamics

The various factors affecting employment rates, wages, and job availability.

Outsourcing

The practice of relocating jobs and services to other countries where labor is cheaper.

Trade Barriers

Government-imposed restrictions that increase the cost and limit the quantity of foreign goods.

Imperfect Competition

Market structure where no single firm has complete power over prices, and companies sell differentiated products.