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Unit 7 - Coggle Diagram
Unit 7
International trade
Key facts about international trade.
Trade surplus Exports exceed imports
Who is the countries largest trade partner
Largest trade deficit with
Exports are How many % of countries output
Dependence
Trade deficit - Imports exceed exports
Economic basis for trade
Nations have different resources
Labour-intensive goods
Land-intensive goods
Capital-intensive goods
Comparative advantage
Assumptions
Two nations
Same size labour force
Constant costs in each country
Diffrent costs between countries
U.S absolute advantage in both
Opportunity cost ratio
Slope of curve
Vegetable sacrificed per ton of beef
Supply and demand analysis
World Price > domestic price
Export surplus
Export supply curve
World price < Domestic price
Import shortage
Import supply curve
The amount that a country imports or exports depends on the equilibrium world price and the equilibrium domestic price