Terms
a good or service made here and sold overseas
export
Who benefits from a "free" trade situation?
domestic consumers
foreign producers
When looking at absolute advantage, we want the (?)(size) number?
higher
When looking at comparative advantage, we want the (?)(size) number?
lower/smaller
A country has (?) in a product if it can make that product more efficiently than any other country
absolute advantage
a good or service produced overseas and sold here
import
Who is hurt by a "free" trade situation?
domestic producers
US - 5 pandas
China - 50 pandas
Who has the absolute advantage?
China
US - 1 teapot costs 1/6 teacup
China - 1 teapot costs 1/3 teacup
Who has the comparative advantage?
US
A country has (?) if it is the most efficient use of a country’s resources to make a product
comparative advantage
a tax on imported goods
tariff
Who benefits from protectionism policy/situation?
domestic producers
UK - 100 skeins of wool yarn; 90 skeins of cotton yarn
Ireland - 90 skeins of wool yarn; 120 skeins of cotton yarn
Who has the absolute advantage in wool?
UK
Spain - 40 hats; 60 rain ponchos
Portugal - 20 hats; 50 rain ponchos
What is Spain's opportunity cost for hats?
3/2 rain poncho
If a country’s exports > imports
trade surplus
the limit on the amount of a product that can be imported
quota
Who is hurt by protectionism policy/situation?
domestic consumers
foreign producers
What number would make this true? Spain has the absolute advantage:
Spain - (?)
Portugal - 200 ships
201(+) ships
If the UK had a opportunity cost of 1 Sunday roast costs 10 haggis, what would Ireland's have to be to have the comparative advantage?
under 10 haggis
If a country’s exports < imports
trade deficit
an economic policy that restricts trade between countries to protect domestic industries from foreign competition
protectionism
Why do we trade? (benefits)
more efficient
can get products not made by ourselves
Greenland - 500 cucumber masks; 2,000 seaweed masks
Iceland - 1,000 cucumber masks; 2,000 seaweed masks
Who has the absolute advantage in seaweed masks?
neither/both
Spain - 40 hats; 60 rain ponchos
Portugal - 20 hats; 50 rain ponchos
Who has the comparative advantage in rain ponchos?
Portugal
(2/5 vs 2/3)
What is the way to calculate comparative advantage (opportunity cost)?
opposite product/product of focus
product lost/product gained