INTERNATIONAL TRADE REVISION
NOTES BEST FOR 2024-2025 EXAM
GRADED A+
International trade ANSWER the exchange of goods and services among nations
what is the importance of international trade? ANSWER In a global world, trading
between countries or consumers provides access to a wider spectrum of products
and services. It also allows countries to specialise in what they produce to export to
other countries.
It is also important to note that even though a country may have a high GDP and
well-developed technology, every product has an opportunity cost
how does every product produced in a country have an opportunity cost?
ANSWER Even though a product could be efficiently produced in your country, it
would still make sense to get involved in international trade and buy this product
from another country, because you might use the production effort and cost to
produce another product that you can produce even more efficiently or that has a
higher value. Therefore both developed and developing countries will engage with
international trade as it benefits all.
Exports ANSWER goods produced domestically and sold abroad
Imports ANSWER goods and services purchased from other countries
International Trade Theory ANSWER Suggests that trade is beneficial when
countries focus on the products they can produce best.
, Examples of International Trade ANSWER modern vehicles require many metal
alloys, rubber, plastic, glass, and various fabrics. Few nations have the resources to
mass-produce all of these and make them cost-effectively. Therefore, it is easier to
trade for these goods rather than rely on self-sufficiency.
Consider China and the United States as an example. China's comparative
advantage over the United States comes in the form of cheap labour, which the
United States cannot match. Chinese employees create basic consumer items at a
lower opportunity cost than their counterparts in the United States. The reason for
that is that China has a larger amount of unskilled labour compared to the U.S.
That's why using this labour in the production of basic customer items doesn't
come with much opportunity cost for China.
On the other hand, a specialized, high-skilled workforce is where the United States
has a comparative advantage. American employees generate sophisticated items or
investment possibilities at lower opportunity costs than their counterparts in China.
Specializing and trading in this manner are beneficial to both parties: the U.S. and
China.
What are the main barriers in International Trade ANSWER quotas and tariffs
there also barriers like health inspections for food and medicine. There is also
nationalism as countries may only want to trade with certain countries if they are
closer or share similar values.
Quotas ANSWER quantity limits on imports. When a country imposes a quota on
a product, only a certain quantity of this product can be imported into the country.
Tariffs ANSWER taxes on imports. When a country imposes a tariff, that makes
imports more expensive.
NOTES BEST FOR 2024-2025 EXAM
GRADED A+
International trade ANSWER the exchange of goods and services among nations
what is the importance of international trade? ANSWER In a global world, trading
between countries or consumers provides access to a wider spectrum of products
and services. It also allows countries to specialise in what they produce to export to
other countries.
It is also important to note that even though a country may have a high GDP and
well-developed technology, every product has an opportunity cost
how does every product produced in a country have an opportunity cost?
ANSWER Even though a product could be efficiently produced in your country, it
would still make sense to get involved in international trade and buy this product
from another country, because you might use the production effort and cost to
produce another product that you can produce even more efficiently or that has a
higher value. Therefore both developed and developing countries will engage with
international trade as it benefits all.
Exports ANSWER goods produced domestically and sold abroad
Imports ANSWER goods and services purchased from other countries
International Trade Theory ANSWER Suggests that trade is beneficial when
countries focus on the products they can produce best.
, Examples of International Trade ANSWER modern vehicles require many metal
alloys, rubber, plastic, glass, and various fabrics. Few nations have the resources to
mass-produce all of these and make them cost-effectively. Therefore, it is easier to
trade for these goods rather than rely on self-sufficiency.
Consider China and the United States as an example. China's comparative
advantage over the United States comes in the form of cheap labour, which the
United States cannot match. Chinese employees create basic consumer items at a
lower opportunity cost than their counterparts in the United States. The reason for
that is that China has a larger amount of unskilled labour compared to the U.S.
That's why using this labour in the production of basic customer items doesn't
come with much opportunity cost for China.
On the other hand, a specialized, high-skilled workforce is where the United States
has a comparative advantage. American employees generate sophisticated items or
investment possibilities at lower opportunity costs than their counterparts in China.
Specializing and trading in this manner are beneficial to both parties: the U.S. and
China.
What are the main barriers in International Trade ANSWER quotas and tariffs
there also barriers like health inspections for food and medicine. There is also
nationalism as countries may only want to trade with certain countries if they are
closer or share similar values.
Quotas ANSWER quantity limits on imports. When a country imposes a quota on
a product, only a certain quantity of this product can be imported into the country.
Tariffs ANSWER taxes on imports. When a country imposes a tariff, that makes
imports more expensive.
