Global markets in action

5 important questions on Global markets in action

What is a national comparative advantage?

the ability of a country to perform an activity or produce a good or service at a lower opportunity costs than any other country.

Name the three effects of exports

  1. price rises above world price which is higher than national price
  2. demand cuts world price
  3. supply cuts world price: at that price it is higher than demand. The surplus will be exported. 

What happens if there is international trade?

international trade lowers the price of an imported good and raises the price of an exported good.
buyers of imported goods benefit from lower prices and sellers of exported goods benefit from higher prices.
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What happens to the surplus with import?

consumer surplus expands, producers surplus shrinks

What are the four main tools to restrict international trade and to protect domestic producers from the competition?

1. tariffs
2. import quotas
3. export subsidies
4. other import barriers

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