ECO101H1 Chapter Notes - Chapter 8: Maple Syrup, Autarky, List Of Auto Parts

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ECO101H1 Full Course Notes

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Why international trade occurs and why economists believe is it beneficial. Imports: goods and services that come into a country. Exports: goods and services that leave a country and they are also made in that country. Globalization: is the phenomenon of growing economic linkages among countries. Nike opening up subsidiaries in different countries, it also boosts the economy over there. The potential production of other goods a country must forgo to produce an auto part is the opportunity cost of that part. Comparative advantage: a country has a comparative advantage in producing a good/service if the opportunity cost of producing the good or service is lower for that country than for other countries. Vietnam has the ideal climate for shrimp, so it doesn"t take a lot out of them to sell the shrimp while it would take a lot out of them to make high tech things.

Related Questions

The law of comparative advantage states that:

a. each country should specialize in producing the good with the lowest opportunity cost.

b. a country that is able to produce something using fewer resources than other countries would gain from specialization and trade.

c. international trade barriers slow the introduction of new goods and better technologies.

d. countries can gain from trade if production is subject to economies of scale.

e. countries must agree on how much of one good exchanges for another.

turquoiseferret638

what is a key factor that determines a firm's profitability?

A differentiation of a firm's product from other products

B factors affecting a firm's entire market

C a firm's average cost of production relative to that of competing firms

D chance events

E all of the above

economic theory suggests countries benefit from international trade by producing more of those good and services for which they have a comparative advantage (and less of that for which a country does not have a comparative advantage). However, countries rarely specialize completely, why?

even with international trade, countries rarely specialize completely because

A, all goods and services can be traded internationally

B, some countries would lose as a result of free trade

C, consumers in different countries have homogeneous tastes

D, some countries do not have an absolute advantege producing anything

E, production of most goods involves increasing opportunity costs.

	Athletic Shoes (pairs)	Music CDs
United States	10,000	20,000
Great Britain	5,000	15,000

(Table: Production Possibilities for the U.S. and Great Britain) The table shows production possibilities for the United States and Great Britain, assuming that both countries could choose to devote all resources to producing either good. Which statement is correct with regard to the information in the table?

a. The U.S. has a comparative advantage in producing music CDs because it can produce more music CDs than anything else.

b. These countries should not engage in trade with one another, because the transportation costs of these goods are too high.

c. To determine which country has a comparative advantage in either good, we would need to know the monetary measure of production costs for both countries.

d. The U.S. has a comparative advantage in producing athletic shoes because it can do so at a lower opportunity cost.

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ECO101H1 Chapter Notes - Chapter 8: Maple Syrup, Autarky, List Of Auto Parts

ECO101H1 Full Course Notes

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