International Essay

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International economics: Factor endowments are the factors of production that a country has available to produce goods and services. Specialization: exists where a country specializes in the production of goods and services where they have a comparative advantage in production. They will then trade to get the goods and services in which they do not specialize. Absolute advantage for a good exists where a country is able to produce more output at a lower opportunity cost of resources than another country. Comparative advantage for a good exist where a country is able to produce a good at a lower opportunity cost of resources than another country. Free trade is international trade that takes place without any barriers, such as tariffs, quotas, or subsidies. A tariff is a duty that is placed upon imports to protect domestic industries from foreign competition and to raise revenue for the government. A quota is an import barrier that set upper limits on the quantity or value of imports that may be imported into a country. A Subsidy is an amount of money paid by the government to firm, per unit of output, to encourage output and to give the firm an advantage over foreign competitors A Voluntary export restraint is a voluntary agreement between an exporting country and an importing country that limits the volume of trade in an particular product (products) The infant industry argument proposes that new industries should be protected from foreign competition until they are large enough to compete in international markets Dumping is the selling of a good in another country at a price below its unit cost of production. Anti-dumpling is legislation to protect an economy against the import of a good at a price below its unit cost of production. A free trade area: exist when an agreement is made between countries, where the countries agree to trade

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