Questions and Answers
The U.S. has been importing baby toys from China, but this year kids are getting sick from these toys. After testing the toys, high dosages of lead are found in the paint used on these toys. The U.S. government now bans the import of these baby toys from China until they are deemed safe again. This is an example of a ________.
nontariff barrier
________ allows a country to buy imports from other countries which have easier production and lower cost of certain goods in its marketplace.
Lower opportunity costs
Using its available resources, the country of Zanzibarus can produce 12 million pounds of beef or 6 million pounds of pork. The neighboring country of Kenyatta can produce 9 million pounds of beef or 3 million pounds of pork. Based on these figures, ________ has a (n) ________ in beef production.
Kenyatta; comparative advantage
Protectionist policies are used by governments in order to ________.
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Looking at historical trends, what would you say is a long-term trend in trade policies?
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For countries participating in a regional trading agreement, what makes this type of agreement significant to the countries involved?
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The General Agreement on Tariffs and Trade (GATT) helps promote trade by?
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What is the tradeoff for the average worker when it comes to international trade policies in specialization and comparative advantage?
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The precursor to the World Trade Organization (WTO) was the ________.
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One of the advantages of intra-industry trade is the division of labor which leads to ________.
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Argentina has 20 workers who can produce 150 pounds of beef or 20 cars in one day; in contrast, the United States has 30 workers who can produce 90 pounds of beef or 60 cars in one day. Which country has the absolute advantage in producing beef?
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The large business Paddle Anywhere, Inc. is in the process of creating, with intra-industry trade, better economies of scale for its folding kayak and paddle business. What do you expect better economies of scale in this company could create for its consumers?
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Study Notes
Nontariff Barriers
- High dosages of lead found in imported baby toys from China led to a U.S. ban on these toys.
- This situation illustrates a nontariff barrier, which restricts trade without using tariffs.
Lower Opportunity Costs
- Lower opportunity costs enable countries to acquire imports from other nations that produce certain goods more economically.
Comparative Advantage
- Zanzibarus can produce 12 million pounds of beef or 6 million pounds of pork.
- Kenyatta can produce 9 million pounds of beef or 3 million pounds of pork.
- Kenyatta holds a comparative advantage in beef production.
Protectionist Policies
- Governments implement protectionist policies to safeguard domestic producers from foreign competition.
Long-Term Trade Trends
- A notable long-term trend in trade policies is the gradual reduction of tariffs over time.
Regional Trading Agreements
- Regional trading agreements aim to remove barriers to labor, goods, and capital movement among participating countries.
GATT and Trade Promotion
- The General Agreement on Tariffs and Trade (GATT) encourages global trade by lowering quotas on foreign goods.
Tradeoffs of Specialization and Comparative Advantage
- International trade policies can result in job layoffs for some workers due to specialization and comparative advantage.
Precursor to WTO
- The General Agreement on Tariffs and Trade (GATT) preceded the establishment of the World Trade Organization (WTO).
Advantages of Intra-Industry Trade
- Intra-industry trade fosters the division of labor, enhancing learning, innovation, and the development of unique skills.
Absolute Advantage in Production
- Argentina has the absolute advantage in beef production, producing more (150 pounds) compared to the U.S. (90 pounds) with a smaller workforce.
Economies of Scale
- Paddle Anywhere, Inc. seeks better economies of scale for its folding kayak and paddle business, which could lead to increased product options and reduced prices for consumers.
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Description
Test your knowledge on key concepts in globalization and trade with these flashcards. Each card presents terms and definitions that capture important aspects of international trade policies and practices. Enhance your understanding of nontariff barriers and other trade mechanisms.
