International Trade

Question 1

Define international trade

Answer 1

the exchange of goods between different countries

Question 2

What are the reasons for international trade

Answer 2

• Specialisation (some countries are better at producing things than others)
• Excess or Shortage can be solved
• Different qualities of goods

Question 3

What is free trade and what are the types of protectionism

Answer 3

free trade is trading without and barriers, protectionism is either a quota (restrictions on trade volume) or a tariff (tax on imports)

Question 4

what is the difference between a trading bloc and a single market

Answer 4

trading bloc is an agreement to trade without barriers, single market is where there is free movement of FOP’s common external tariffs and free trade.

Question 5

what are the pros of free trade

Answer 5

Pros
- larger market to sell to
- Economies of scale
- Could lower production costs
- More competition (consumer benefits)

Question 6

what are the pros of protectionism

Answer 6

• tax revenue for government
• more dominance over domestic market
• less competition

Question 7

what are the challenges to businesses trying to develop international markets

Answer 7

• more competition
• exchange rate fluctuations
• cultural differences
• different laws/regulations
• logistics