Chapter 17
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Chapter 17. International Trade. Absolute and Comparative Advantage. Resource Distribution and Specialization Natural Resources Capital and Labor Unequal Resource Distribution Specialization and Trade Export – good or service sent to another country

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International Trade

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Chapter 17

Chapter 17

International Trade


Absolute and comparative advantage

Absolute and Comparative Advantage

  • Resource Distribution and Specialization

    • Natural Resources

    • Capital and Labor

    • Unequal Resource Distribution

    • Specialization and Trade

      • Export – good or service sent to another country

      • Import – good or service brought in from another country


Absolute and comparative advantage1

Absolute and Comparative Advantage

  • Absolute Advantage

    • The ability to produce more of a given product using a given amount of resources

  • Comparative Advantage

    • The ability to produce a product most efficiently given all the other products that could be produced


Absolute and comparative advantage2

Absolute and Comparative Advantage

-Importance of Opportunity Cost

- Mutual Benefits


Trade barriers and agreements

Trade Barriers and Agreements

  • Trade Barriers

    • Trade restriction

      • Tariff – tax on imported goods

      • Quotas and VERS – cap on amount that can be imported/ voluntary export restraint

      • Licenses, Regulations, Sanctions, Embargos


Trade barriers and agreements1

Trade Barriers and Agreements

  • Effects of Trade Barriers

    • Increased Prices for Foreign Goods

    • Trade Wars

  • Arguments for Protectionism

    • Protecting Jobs

    • Protecting Infant Industries

    • Safeguarding National Security


Trade barriers and agreements2

Trade Barriers and Agreements

  • Trade Agreements

    • World Trade Organization (WTO)

    • The European Union (EU)

    • NAFTA

    • DR-CAFTA and FTAA


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