International Trade

james liew
Mind Map by james liew, updated more than 1 year ago
james liew
Created by james liew about 4 years ago
10
1

Description

Leaving Certificate Economics Mind Map on International Trade, created by james liew on 02/08/2016.

Resource summary

International Trade
1 The Law of Absolute Advantage

Annotations:

  • States that each country should specialise in the production of that good in which it has an absolute advantage, i.e. if it can produce the good more efficiently than other countries
1.1 Assumptions
1.1.1 There are two countries
1.1.2 Two products are produced
1.1.3 No transport costs exist
1.1.4 There is one factor of production
2 The Law of Comparative Advantage

Annotations:

  • States that a country should specialise in the production of those goods and services in which it is relatively most efficient and trade for the remainder of its requirements
3 Terms of Trade
3.1 Assumptions/Limitations
3.1.1 Transport costs are ignored

Annotations:

  • For an island nation like Ireland, transport costs can be a major cost factor and can act as a barrier to trade. A firm's cost efficiencies may be eliminated by the transport costs involved.
3.1.2 Perfect mobility of the factors of production is assumed
3.1.3 Free Trade is assumed to exist
3.1.4 Law of diminishing marginal utility is ignored
3.1.5 An equal distribution of benefits occurs
4 Sources of Comparative Advantage for the Irish Economy
4.1 Educated and skilled workforce

Annotations:

  • Companies locate here without incurring exorbitant training costs. The workforce had developed specific skills in production over a period of time, e.g. IT, pharmaceutical companies
4.2 Climate

Annotations:

  • Our climate is suitable for production of crops like potatoes and grazing for livestock (beef).
4.3 Low rate of Corporation Tax

Annotations:

  • This means that the costs of operation may be more competitive in Ireland than in other countries. The 12.5% rate makes Ireland attractive to multinationals looking to cut costs.
Show full summary Hide full summary

Similar

Using GoConqr to study Economics
Sarah Egan
Economics
Emily Fenton
Economics - unit 1
Amardeep Kumar
AN ECONOMIC OVERVIEW OF IRELAND AND THE WORLD 2015/16
John O'Driscoll
Sociology: Education
Siobhan Lee
Using GoConqr to teach Economics
Sarah Egan
Functions of Money
hannahcollins030
Comparative advantage
jamesofili
GCSE - Introduction to Economics
James Dodd
PMP Formulas
Krunk!
Market & Technology Dynamics
Tris Stindt