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International Trade

Chapter 17. International Trade. Absolute and Comparative Advantage. Resource Distribution and Specialization Natural Resources Capital and Labor Unequal Resource Distribution Specialization and Trade Export – good or service sent to another country

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International Trade

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  1. Chapter 17 International Trade

  2. Absolute and Comparative Advantage • Resource Distribution and Specialization • Natural Resources • Capital and Labor • Unequal Resource Distribution • Specialization and Trade • Export – good or service sent to another country • Import – good or service brought in from another country

  3. Absolute and Comparative Advantage • Absolute Advantage • The ability to produce more of a given product using a given amount of resources • Comparative Advantage • The ability to produce a product most efficiently given all the other products that could be produced

  4. Absolute and Comparative Advantage -Importance of Opportunity Cost - Mutual Benefits

  5. Trade Barriers and Agreements • Trade Barriers • Trade restriction • Tariff – tax on imported goods • Quotas and VERS – cap on amount that can be imported/ voluntary export restraint • Licenses, Regulations, Sanctions, Embargos

  6. Trade Barriers and Agreements • Effects of Trade Barriers • Increased Prices for Foreign Goods • Trade Wars • Arguments for Protectionism • Protecting Jobs • Protecting Infant Industries • Safeguarding National Security

  7. Trade Barriers and Agreements • Trade Agreements • World Trade Organization (WTO) • The European Union (EU) • NAFTA • DR-CAFTA and FTAA

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