Ch 9 Microeconomics

Tariff

A tax imposed by a government on imports. ("Tariff: A tax imposed by a government on imports.")

Imports

Goods and services bought domestically but produced in other countries. ("Imports: Goods and services bought domestically but produced in other countries.")

Exports

Goods and services produced domestically but sold in other countries. ("Exports: Goods and services produced domestically but sold in other countries.")

Comparative advantage

The ability to produce a good or service at a lower opportunity cost than competitors. ("Comparative advantage... lower opportunity cost than competitors.")

Absolute advantage

The ability to produce more of a good or service than competitors using the same amount of resources. ("Absolute advantage: The ability to produce more... using the same amount of resources.")

Opportunity cost

The highest-valued alternative that must be given up to engage in an activity. ("Opportunity cost: The highest-valued alternative...")

Autarky

A situation in which a country does not trade with other countries. ("Autarky, a situation in which a country does not trade...")

Terms of trade

The ratio at which a country can trade its exports for imports. ("The terms of trade is the ratio at which a country can trade...")

Free trade

Trade between countries without government restrictions. ("Free trade: Trade between countries that is without government restrictions.")

Quota

A numerical limit a government imposes on the quantity of a good that can be imported. ("Quota: A numerical limit a government imposes...")

Voluntary Export Restraint (VER)

A negotiated limit on the quantity of a good exported to another country. ("VERs: negotiated between countries on the quantity of a good imported...")

External economies

Reductions in a firm's costs that result from an increase in the size of an industry. ("External economies are reductions in a firm's costs...")

Protectionism

The use of trade barriers to shield domestic firms from foreign competition. ("Protectionism: The use of trade barriers to shield domestic firms...")

World Trade Organization (WTO)

An international organization that oversees international trade agreements. ("WTO: An international organization that oversees international trade agreements.")

Dumping

Selling a product for a price below its cost of production. ("Dumping: selling a product for a price below its cost of production.")

Smoot-Hawley Tariff Act

A 1930 law that raised U.S. tariffs to historically high levels. ("Smoot-Hawley Tariff Act (1930)... raised tariffs to their highest value...")

Logrolling

Politicians trading votes to support each other's favored tariffs or policies. ("This process is known as logrolling.")