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international trade

the exchange of goods and services among nations


goods and services purchased from other countries


goods and services sold to other countries

absolute advantage

occurs when a country has natural resources or talents that allow it to produce an item at the lowest cost possible

comparative advantage

the value that a nation gains by selling what it produces most efficiently

balance of trade

the difference in value between exports and imports of a nation

trade deficit

occurs when a nation imports more than it exports

trade surplus

occurs when a nation exports more than it imports

free trade

commercial exchange between nations that is conducted on free market principles, without restrictive regulations


a tax on imports

revenue-producing tariff

used to produce revenue for a country

protective tariff

used to increase the price of imported goods so that domestic products can compete with them


limits either the quantity or the monetary value of a product that may be imported


a total ban on specific goods coming into and leaving a country


a government's policies that restrict imports in order to protect domestic industries

(WTO) World Trade Organization

a coalition of nations that makes rules governing international trade

(NAFTA) North American Free Trade Agreement

an international trade agreement among the United States, Canada, and Mexico

(EU) European Union

established free trade among the European member nations and a central bank


letting another company use a trademark, patent, specific formula, company name, etc. for a fee or royalty

franchise agreement

a franchisor grants the franchisee the rights to operate under the company name

contract manufacturing

involves hiring a foreign manufacturer to make your products, according to your specifications

joint venture

a business enterprise that companies set up together

(FDI) Foreign Direct Investment

the establishment of a business in a foreign country


large corporations that have operations in several countries


midsize or smaller companies that have operations in foreign countries


selling the same product and using the same promotion methods in all countries


changing an existing product and/or promotion to better suit the characteristics of a country or region


specially designing products or promotions for certain countries or regions


having possibility or capability.


the basic facilities and services that support a community


belonging to a corporation


direct one's attention on something

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