International Trade

Natalia Djohari
Flashcards by Natalia Djohari, updated more than 1 year ago
Natalia Djohari
Created by Natalia Djohari almost 6 years ago
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Chapter 6 of ECON1101

Resource summary

Question Answer
Domestic Price the equilibrium price that would occur in a country if no international trade is allowed
World Price the equilibrium price on the international market
Small Open Economy an economy that participates in international markets for goods and services, but its production or consumption is small enough compared to the rest of the world that its supply or demand does not affect the world price
Closed Economy (autarky) an economy that does not engage in international trade
Open Economy an economy that engages in international trade
Gains from Trade the extra total surplus available in an open economy situation compared to a closed economy
Benefits of engaging in trade 1. more goods for consumer 2. producer can sell to a larger market 3. monopolies or oligopolies might face international competition 4. flow of ideas and technology is faster and easier
Import Tariff a tax on imported goods or services
Import Quota a quantity limit on the amount of goods or services permitted to be imported
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