Economics 103 "Microeconomics" Lecture 1 Segment 2

Law of Comparative Advantage

The economic theory that a country should specialize in producing goods they can produce more efficiently than others and trade for the rest.

Mercantilism

An economic theory that emphasizes government regulation of a nation's economy for augmenting state power at the expense of rival national powers.

Positive Argument

An argument based on facts and evidence rather than opinions or feelings.

Protecting High Wages Fallacy

The mistaken belief that free trade will lower wages in high-wage countries by introducing competition from low-wage countries.

Productivity-Adjusted Real Wage

The wage that accounts for the productivity level of workers; it determines employment and investment patterns.

Monopolistic Wages

Wages that are artificially high due to a lack of competition, making workers less competitive in the labor market.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.

Tariff

A tax on imports or exports between sovereign states, which serves as a barrier to trade.

Dumping

The practice of selling goods in another country at a price lower than in its home market, often perceived negatively.

Free Trade

International trade left to its natural course without tariffs, quotas, or other restrictions.

National Security Trade Argument

The argument that trade should be restricted for national security reasons, either for imports or exports.

Transshipment Issues

Problems arising from the transfer of goods through one or more intermediary countries before reaching their final destination.

Specialization in Economics

The focus of factors of production on the production of a limited range of goods to gain greater efficiencies.

Claude Frederic Bastiat

A French economist known for his advocacy of free trade and criticism of protectionism, notably through his essay 'The Candle Makers' Petition.'

Division of Labor

The breakdown of production processes into separate tasks, allowing workers to specialize in particular areas, which increases efficiency.