4.1.2 Specialization and Trade Flashcards
1
Q
What are some reasons for international trade?
A
- Increased efficiency
- Increased productivity
- Economic advantage
- Innovation
- Growth
2
Q
What is absolute advantage?
A
- Fewer resources are needed to produce the same amount of goods.
- There will be lower costs than other economies.
3
Q
What is comparative advantage?
A
- How much productive or cost efficient one country is than another
4
Q
What are the assumption made in the theory of comparative advantage?
A
- Labour is the only factor of production
- The supply of labour is unchanged
- Tastes are similar in both countries
5
Q
What are the advantages of specialisation and trade?
A
- Allows for trade
- Improved national income (GDP)
- Greater consumer choice
- Better quality goods and services
6
Q
What are the disadvantages of specialisation and trade?
A
- Over-reliance on a limited number of industries
- Risk of structural unemployment
- Reliance on other nations
- Greater competition
