Types of Economies (Trade)
What is an autarky?
A self-sufficient economy that doesn’t trade internationally.
Define factor endowments.
The resources a country has—land, labour, capital, natural resources.
Name one benefit to consumers from trade.
Access to more goods and lower prices.
What is protectionism?
Government policies limiting imports to protect local industries.
What is comparative advantage?
Producing goods at lower opportunity cost than another country.
Give one example of a closed economy.
Cuba / Myanmar / North Korea.
How do factor endowments influence what a country produces?
They shape what it can produce efficiently.
How does trade help businesses grow?
It opens access to larger markets.
Why might a country restrict trade to protect jobs?
Imports can undercut local industries.
What is absolute advantage?
Producing more output with the same resources.
What makes an open economy different from a closed one?
It trades freely with few restrictions.
Name one of Australia’s key factor endowments.
Minerals / skilled labour / arable land / energy resources.
What is economies of scale?
Producing more reduces cost per unit.
Give an environmental reason against trade.
Transport emissions / resource overuse / deforestation.
What is competitive advantage?
Ability to produce better or cheaper goods than rivals.
What is a mixed economy?
It trades freely with few restrictions.
How can factor endowments create a comparative advantage?
By allowing a country to produce certain goods at lower opportunity cost.
How does trade encourage innovation?
Through international competition.
How can international trade affect culture?
It may cause cultural change or loss of traditional practices.
Give an example of Australia’s comparative advantage.
Exporting minerals or agricultural products.
Why do most countries prefer to be open rather than closed?
To gain access to global markets, technology, and resources.
Give an example of how factor endowments differ between two countries.
Australia (minerals) vs Japan (technology/innovation).
What political or social benefit can trade create between nations?
It fosters cooperation and stronger relationships.
Name one tool governments use for protectionism.
Tariffs, quotas, subsidies, import bans.
What is strategic advantage?
An ability to gain long-term benefits or control through trade.