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unit 7 - Coggle Diagram
unit 7
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In a model compiled to show the economic relationship between two nations, what can be used to determine whether each country has an absolute advantage or comparative advantage?
Production possibilities curves
What is the key determinant in whether a country can gain from specialization in international trade?
Comparative advantage
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What is it called when two countries each specialize in a product, exchange them, and end up obtaining more of both products than they would have accomplished on their own?
Gains from trade
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Economizing requires that any particular good be produced by the nation having the lowest domestic opportunity cost, or the comparative advantage for the good
Suppose that in the United States, the opportunity cost for 1 ton of beef is 1 ton of vegetables. Which of these prices would make it worthwhile for the United States to trade its beef internationally?
1 ton of beef for 2 tons of vegetables
A revenue tariff is used to generate money for the government, while a protective tariff shields domestic producers from foreign competition.
Low import quotas, which prohibit imports once quotas have been filled, have proven to be effective when a product continues to be imported in large quantities despite high tariffs
Tariffs end up increasing the output from inefficient industries while decreasing the output from efficient industries
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Why do economists generally support the Trade Adjustment Assistance Act?
It helps create political support for international free trade.