Chapter 5 notes - Chapter 5 International Trade Theory Free...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 5 International Trade Theory Free trade- the absence of government barriers to the free flow of goods and services between countries New trade theory- theory that sometimes countries specialize in the production and export of particular products not because of underlying differences, but because in certain industries the world market can support only a limited number of firms Mercantilism- an economic philosophy advocating that countries should simultaneously encourage exports and discourage imports Zero-sum game- economic gain by one country results in an economic loss by another country Absolute advantage- a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it Constant returns to specialization- the units of resources required to produce a good are assumed to remain constant no matter where one is on a country’s production possibly frontier Dynamic effects and economic growth of free trade: free trade might increase a country’s stock...
View Full Document

This note was uploaded on 12/04/2011 for the course MKT 310 taught by Professor Tunga during the Summer '10 term at Michigan State University.

Page1 / 2

Chapter 5 notes - Chapter 5 International Trade Theory Free...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online