ECON 102 - Chapter 10

These flashcards cover key concepts related to international trade, including theories, advantages, and economic policies.

International Trade

The exchange of goods and services across international borders.

Absolute Advantage

A theory stating that a nation has an advantage in producing goods and services it can produce more efficiently than others.

Comparative Advantage

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

Factor Endowment

The resources, such as skills and equipment, that a country has available for production.

Gains from Trade

The increased output and consumption that results when countries specialize in the production of goods in which they have a comparative advantage and trade.

Terms of Trade

The ratio at which one country's goods can be exchanged for another country's goods.

Protectionism

Economic policy aimed at shielding domestic industries by restricting imports.

Import Quota

A limit imposed on the amount of a specific good that can be imported into a country.

Tariff

A tax placed on imported goods to raise their price and protect domestic producers.

Specialization

The process by which individuals or countries focus on the production of a limited scope of goods to gain greater efficiency.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.