Business Praxis 2 5101: Law and International Business (2023/2024) Graded A

Business Praxis 2 5101: Law and International Business (2023/2024) Graded A International Trade occurs when a firm exports goods or services to consumers in another country International Trade Benefits A company has a new market to sell. It can increase its sales and tremendously profit by reaching customers. Company may have surplus supply. Customer can enjoy product that are not available domestically.Products can be sold for less money, at a cheaper price to become more competitive. Less dependency on a single market, if something goes wrong, the item will still be available. International Trade Drawbacks Can lead to job losses and company failures domestically. It will be challenging for domestic companies to catch up with foreign companies. Concerns about working conditions; some countries has little regulations, people may work in unsafe and unsanitary conditions. Children, workers are working countless hours for little pay. Product may be of lower quality or even hazardous when jobs are outsourced. A company may also face barriers to trade such as tariffs, quotas, and cultural resistance. Domestic companies that have good practices and fairly compensated employees may have difficulty competing with international companies that do not. Trade Deficit An imbalance in international trade in which the value of imports exceeds the value of exports. Opportunity Cost the most desirable alternative given up as the result of a decision. The loss of potential gain from other alternatives when one alternative is chosen. What a producer gives up by choosing different options. Example: If a producer can make a dozen cookies in an hour or a dozen brownies in an hour for the same cost and he chooses to make the cookies, then the dozen brownies are the ___________. Comparative Advantages The ability of a country to produce a good at a lower cost than another country can. Absolute Advantage the ability to produce a good using fewer inputs than another producer. For instances, if one country can make 10 shirts for the cost and effort that another country uses to make 5 shirts, then the country that can make more has the ____________. Quotas Put a restriction on the number of imports. limitations on the amount of specific products that may be imported from certain countries during a given time period Tariffs Taxes on imported goods. The cost of imports is increased. Domestic production is cheaper. Voluntary Export Restraints voluntarily imposed limits on the number or volume of products exported to a particular country. Self-applied rules that restrict what a country can export to another country. Embargoes a complete ban on the import or export of certain products. Occurs when a country restricts trade with a specific foreign country. It is often for political or economic reasons. Currency Coins and paper bills used as money. When a country purchases items from another country, they first change their money over to that ____________. Benefit and drawbacks of a weak dollar If the dollar is weak, it has less purchasing power and it becomes more expensive to import fro foreign countries. As prices increase. consumers spend less. Fuel costs tend to go up. Inflation can occur because of this. Central banks might raise interest rates to attract investors. A benefit of a weak dollar is that a trade deficit could decrease and domestic job growth can occur, especially in industries like manufacturing. Benefit of a weak dollar Foreign goods cost less, so importing may increase while exporting or domestically-produced items go down. Prices can go down as well. Balances of Trade the difference in value between a nation's exports and its imports. Exchange Rates the prices at which currencies trade