Chapter 12 Flashcards
Through specialisation how can this lead to lower prices for consumers
As countries specialise, they can produce goods/services more efficiently and this reduces the average
cost per unit. This may mean lower prices for consumers.
Why does choice increases through international trade
because there are some products which other countries have which you are unable to obtain in the uk while it being a cost effective process.
Through international trade and specialisation can lead to higher investment into a business
Businesses can also benefit from this specialisation as they can now achieve lower costs of production.
Over the years, many clothing firms have moved their production to China in order to exploit their absolute
advantage in the textile industry. Lower costs can lead to higher profit margins and this can lead to further
investment into their business.
Through international trade how can firms
reach even higher profits
As countries trade, there are more opportunities to sell abroad and to enter new markets. If the market
size increases, then businesses can produce more and exploit economies of scale. This means that they
can lower their average costs even further and achieve even higher profits.
Free trade
Free trade is where there is free movement of goods and services between countries without any
restrictions
