Trade

Question 1

free trade

Answer 1

when trade occurs between countries without restrictions or barriers

Question 2

comparative advantage

Answer 2

countries should specialise in goods and services they can produce at a lower opportunity cost compared to another country.

improvement in allocative efficinecy as resources go to countries who are most efficient procers to maximise output

Question 3

benefits of free trade

Answer 3

large economies of scale–with a larger international amrket to access busninesss have potential to grow larger business lwoer ac increase productive efficnecy
lower costrs translate into higher profits

exploitation of comparative advantage
greater free trade and specialisation resources are allocated where conturies have their comparative advantage

increased comp and lower prices–larget market to access competition become s gloal as

higher rates of economic growth —specialisation measn higher export potnetial anmd revenue generated as (X-M) increases ad increases economic growth rises

faster rates of technology transfers

Question 4

cons of trade

Answer 4

economy-some countries import more c.a deecit (x-m) falls

importing capital replaces workers increase in structural unemployment

increase in trade increase in production increase in pollution fall in quality of life

Question 5

benefits of protectionism

Answer 5

tarrifs –increase tax rev increase g increase ad

tarrifs higher import prices fall in demand for M valuje of M c.a deficit reduced

Question 6

eval for protectionism

Answer 6

ratialiation of trading partners
trade war
export revenue falls
25% tarrif on imported steel
china imported a 25% tarrif on us soy beans

Question 7

examples of protectionism

Answer 7

quotas
increase i,r
income tax increases
tarrifs

Question 8

reasons for protectionsim

Answer 8

protects local domestic firms especially small firms from import