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Microeconomics Unit 2 MGHill - International Trade, International Finance, and Comparative Advantage

Terms in this set (33)

comparative advantage
the foundation for establishing the benefits of trade
terms of trade
the price of one good in terms of another
true
T/F: The wealth, or additional well-being, created by trade, does not have to be monetary.
specialization
the practice of producing a single good or service rather than producing multiple goods or service
absolute advantage
refers to the ability to produce more output, given similar resources, than another produce
the dollar value of a quota rent
the size of the quota times the difference between the quota price and the world price
autarky
a state that exists whenever an entity can survive or continue its activities without external assistance or international trade
deadweight loss
the value of the economic surplus that is forgone when a market is not allowed to adjust its competitive equilibrium
consumer surplus
can be thought of as the wealth that trade creates for consumers in a market
producer surplus
can be thought of as the wealth that trade creates for producer in a market
consumer price
the difference between the max price consumers are willing and able to pay for a good or a service and the price they actually pay
producer surplus
the difference between the price producers receive for a good or a service and the minimum price they are willing and able to accept
free trade
trade between nations that is free from barriers
dumping
the practice of ____________________ describes selling products in a foreign market at a price below average cost
autarky
the market price will be highest and the quantity traded lowest a domestic market in ________________
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