Advantages and Disadvantages of International Trade

Flashcards to help review the advantages and disadvantages of international trade based on the lecture notes.

What is comparative advantage in international trade?

A country specializes in producing goods that it can produce efficiently and at the lowest opportunity cost.

What is a disadvantage of over-specialization in production?

Over-specialized production centers tend to be less flexible and may struggle to diversify if demand falls.

What do economies of scale refer to in international trade?

Producing a narrower range of goods and services that allows a country to produce in higher volumes at a cheaper cost per unit.

What is dumping in international trade?

Exporting goods at a price that is lower in the foreign market than the price charged domestically.

What impact does increased trade have on domestic economies?

Increased trade results in higher competition, lowering prices and allowing consumers to buy more for their money.

How can protectionism affect domestic industries?

A government may protect important domestic industries by imposing taxes and tariffs on imported goods.

What is the transfer of technology in the context of international trade?

The application of new technologies and designs that can lead to cost savings and support innovation and enterprise.

How does increased production for export affect employment?

Increased production is likely to result in increased employment due to the multiplier effect, creating more jobs across the economy.

What is the concept of de-skilling in relation to trade?

De-skilling refers to the reduction of skills needed for jobs due to the mechanization and exploitation in labor-intensive industries.