Trade in the Global Economy (HSC SSCE Economics): Flashcards
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Practise the cards
10 cards from this deck
Free trade definition
Free trade definition
Governments remove barriers to international goods/services exchange
Comparative advantage
Comparative advantage
Countries produce where they have greatest relative efficiency
Opportunity cost
Opportunity cost
Value of next best alternative given up when making a choice
Economies of scale in free trade
Economies of scale in free trade
Specialisation allows larger production volumes, lowering unit costs
Dumping
Dumping
Selling goods below their true cost of production
Infant industry problem
Infant industry problem
New industries struggle to compete with established foreign producers
Seven main advantages of free trade
Seven main advantages of free trade
Access, specialisation, efficiency, scale, competition, innovation
Five main disadvantages of free trade
Five main disadvantages of free trade
Unemployment, infant industries, dumping, environment, security
Environmental degradation in free trade
Environmental degradation in free trade
Race to bottom: producers avoid pollution controls to gain advantage
National security vulnerability from trade
National security vulnerability from trade
Heavy trade dependence creates risks during emergencies/conflicts