Questions and Answers
What does the law of comparative advantage state?
A country should specialize in goods it can produce most efficiently.
What does the law of absolute advantage state?
Each country should specialize in goods it can produce more efficiently than other countries.
What are the terms of trade?
The ratio of export prices to import prices.
What does the first assumption underlying comparative advantage ignore?
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What is assumed about the mobility of factors of production?
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Which costs are ignored in the assumptions?
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What strategic reasons may lead to ignoring comparative advantage?
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How does climate give Ireland a comparative advantage?
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What is Ireland's corporate tax rate advantage?
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Why is Ireland's skilled labor force an advantage?
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How do natural resources contribute to Ireland's comparative advantage?
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How does the use of English language benefit Ireland?
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What role does infrastructure play in Ireland's comparative advantage?
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How does EU membership benefit Ireland?
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Why is a stable political system advantageous?
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What does the fair trade movement seek?
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What is national competitiveness?
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How do transport costs affect national competitiveness?
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Why is it important for a country to trade for the remainder of its requirements?
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What does the assumption of perfect mobility of factors of production entail?
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How does Ireland's access to water contribute to its comparative advantage
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What is one impact of Ireland's stable political system on its economy?
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How does a weakening euro against the pound affect Eurozone exports?
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What are visible exports?
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What are visible imports?
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What are invisible exports?
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What are invisible imports?
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What is the balance of payments?
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What indicates a balance of payments surplus?
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What can cause a balance of payments deficit?
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Why might a country use trade protection?
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What is dumping in trade?
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What characterizes an open economy
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What is one advantage of international trade for economic growth
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How does international trade affect employment?
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What is one disadvantage of international trade related to the environment?
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Why might over-dependence on foreign markets be a disadvantage?
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What is a closed economy?
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What is a tariff?
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What is a quota in trade?
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What is an embargo?
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How do subsidies help exporters?
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What is currency devaluation?
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