International Trade via Supply and Demand
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These flashcards cover key terms and definitions from the unit on international trade focusing on supply and demand concepts.
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35 Terms
Absolute Advantage
The ability of a country to produce more of a good than another country.
Comparative Advantage
The ability of a country to produce a good at a lower opportunity cost than another country.
Opportunity Cost
The loss of potential gain from other alternatives when one alternative is chosen.
Specialization
The process of concentrating on and becoming an expert in a particular area of production.
Exports
Goods produced domestically and sold to another country.
Imports
Goods produced in another country and sold domestically.
Supply Curve
A graphical representation of the relationship between the price of a good and the quantity supplied.
Demand Curve
A graphical representation of the relationship between the price of a good and the quantity demanded.
Consumer Surplus
The difference between what consumers are willing to pay and what they actually pay.
Producer Surplus
The difference between what producers are willing to accept for a good and what they actually receive.
Marginal Analysis
The examination of the additional benefits of an activity compared to the additional costs of that activity.
Government Intervention
Actions taken by government to affect the economy or market outcomes.
Tariff
A tax imposed on imported goods.
Market Efficiency
A situation in which the allocation of resources results in the highest possible level of economic well-being.
Flow of Trade
The movement of goods and services between countries.
Equilibrium Price
The price at which the quantity supplied equals the quantity demanded.
Market Price
The price determined by supply and demand in an open market.
Competitive Market
A market with many buyers and sellers, where no single buyer or seller can influence the price.
Gains from Trade
The increased quantity and variety of goods and services that trade provides.
Domestic Economy
The economy of a country, encompassing all production and consumption within its borders.
International Trade
The exchange of goods and services between countries.
Price Controls
Government regulations that set maximum or minimum prices for specific goods.
Resource Allocation
The process of distributing available resources among various projects or business units.
Consumer Choice
The decision-making process by which consumers decide what to purchase.
Market Demand
The total demand for a product or service within a market.
Market Supply
The total supply of a product or service within a market.
Free Trade
International trade free of government interference, such as tariffs or quotas.
Trade Partner
A country engaged in trade with another country.
Production Possibility Frontier (PPF)
A curve that depicts all possible combinations of two goods that can be produced within a given economy.
Consumer Preferences
The subjective tastes and preferences that drive consumer choices.
Price Elasticity of Demand
A measure of how much the quantity demanded of a good changes when its price changes.
Income Elasticity of Demand
A measure of how much the quantity demanded of a good changes in response to a change in consumer income.
Standard of Living
The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class in a certain geographic area.
Tax Revenue
Income gained by the government through taxation.