EC201-Chp8

EC201-Chp8 - EC201-Chp 8 Terms Tariff- A tax imposed by a...

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EC201-Chp 8 Terms Tariff - A tax imposed by a government on imports Imports - Goods and services bought domestically but produced in other countries Exports - Goods and services produced domestically but sold to other countries Comparative Advantage - The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors Drives trade Opportunity Cost - The highest valued alternative that must be given up to engage in an activity Absolute Advantage - The ability to produce more of a good or service than competitors when using the same amount of resources 1000 Hours assumed for each country B (consumptions w/ trade) -A (consumptions w/out trade = Gains from trade Autarky - A situation in which a country does not trade with other countries Terms of Trade - The ratio at which a country can trade its exports for imports from other countries Gains from International Trade- Complete Specialization: Not all goods and services are traded internationally
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EC201-Chp8 - EC201-Chp 8 Terms Tariff- A tax imposed by a...

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