data response

Data response excercise-

1.  A. dumping-the flooding of a market, especially one in a foreign country, with cheaply priced merchandise

B. unemployment-the condition of having no job

2.

as the graph shows because of the tariffs the imports have decreased thus more wheels are being produced within the country.

3. demand deficit unemployment because the economuy has reached a stage of slow growth or negative growth thus consumers spnd less on goods and services. thus leading to increased unemployment

4.The consequences  on the chinese economy is taht the economy of china may have a slowing in economic growth becasue they are not able to sell their goods over seas. Thre is also a loss in world effeciency as the goods china could have sold to America are now not being sold but rather produced by less effecient domestic suppliers instead of chine supplier thus ending in a dead weight loss of welfare. 

notes for free trade

Free trade	International trade left to its natural course without tariffs, quotas, or other restrictions.
For and against protectionsim	For- protects domestic employment Protect economy from low cost labour Protect infant industries Avoid over-specialization Strategic reasons Prevent dumping Protect product standards Raise gov revenue Correct balance of payment deficit Against- raise prices for consumers Less choice for consumers Decreased competition Inefecient use of world resources Hinder economic growth
Types of protectionism	Tar       Tarrifs- a tarrif is a tax put on imported goods causing a shift in supply curve of the world. U  Used as anti dumping.       Leads to loss of sconsumer surplus leading to loss of welfare      D  now produced by relatvly inefficient domestic farmer leading to a welfare loss
Subsidies	Amount of money paid to a firm       Leads to more wheet produced by domestic which leads to ineffeciency leading to loss of welfare      Indirectly leads to increase in taxes etc.
Quotas	Ad   A physical limit set on the numbers or value of goods that can be imported into a country       L  leads to loss of consumer surplus which leads to loss of welfare      ineffeciency
Math
Admin barriers	Dd red tape- admin red tape they have to pass leads to higher costs and slowness D     health and safety standards and eviromental standards- rstrict for the sake of standards but still need to keep up imports                                     embargos- an extreme qyota, a form of extreme politcal punishment
Nationilstic campeign	A ad A country might try to run marketing campeigns in order to encourage people to buy domestic

Free trade bw

a)      Free trade-                        International trade left to its natural course without tariffs, quotas, or other restrictions.

b)       For- protects domestic employment

Protect economy from low cost labour

Protect infant industries

Avoid over-specialization

Strategic reasons

Prevent dumping

Protect product standards

Raise gov revenue

Correct balance of payment deficit

Against- raise prices for consumers

Less choice for consumers

Decreased competition

Inefecient use of world resources

Hinder economic growth

c)       Prob diesl

Chip c

work sheet for intl. trade

Name ___________________

Block_________

S21: Why Do Countries Trade Objectives Based Review

1. Objective 1: Define international trade.

International trade is the exchange of goods and services between countries.

2. Objective 2: Identify and explain the gains from trade:

1	Lower prices	Allows consumers to buy goods and services at lower than domestic price.
2	Greater choice	IT enables consumers to have a greater choice of products
3	Differences in recourses	It allows access to resources a country may lack or choose not to exploit.
4	Economies of scale	When there is international trade there is a larger market thus level of prod. will increase
5	Increased competition	Increased competition leads to greater efficiency
6	More efficient allocation of resources	w/o gov’t interference
7	Source of foreign exchange	IT enables countries to obtain foreign exchange

3. Objective 3: Define and give examples of specialization and the division of labor.

Specialization occurs whena firm or a country concentrates production on one or a few goods or services

In it theory specialization forms basis for the gains from trade

According to comparative advantage and economies of scale of labor

4. Objective 4: Define, explain, illustrate   and give examples of absolute advantage. (HL)

Define Absolute Advantage: When a country can produce more of a product than another country using fewer resources.

Explain the theory of absolute advantage: The theory of absolute advantage states that if a country specializes and exports a product in which it has an Absolute Advantage in production the result is an increase in production and consumption of that product.

Illustrate reciprocal absolute advantage and total absolute advantage on a graph.

Reciprocal AA                                                Complete AA

 

Give examples of absolute advantage:

5. Objective 5: Define, explain, illustrate and give examples of comparative advantage.

Define comparative advantage:

If a country can produce a good at a lower opp. cost than another country

Explain the theory of comparative advantage:

The theory of Comparative Advantage demonstrates that as long as opportunity cost are different between countries then if they specialize in the product in which they have a lower opportunity cost in producing and trade for the other product then both countries can consume beyond their PPC.

Illustrate comparative advantage on a graph. Also illustrate the one situation when countries would not benefit from trade.

 

Give examples of comparative advantage:

6. Objective 6: Calculate opportunity costs to identify comparative advantage.

	Cotton	Cars
Egypt	300	100
EU	500	200

Who has the absolute advantage in producing cotton? Cars?

Cotton- EU

Cars- Eu

Who has the comparative advantage in producing cotton? Cars?

Cotton- Egypt

Cars- EU

Suggest a favorable rate of exchange:

1/0.35=2.86

Cotton 0.35

Cars=2.86

Illustrate the gains from trade on a graph:

 

Objective 7: Explain the limitations of comparative advantage theory.

1	Perfect knowledge	It is assumed there is perfect knowledge
2	Transport costs	assumed there is no transport costs
3	2 countries producing 2 goods	assume that there are only 2 economies producing 2 goods
4	Economies and diseconomies of scale	assumed that costs do not change with economies or diseconomies of scale
5	Identical goods	goods traded are assumed to be identical
6	Factors of production	factores of production stay in country
7	Free trade	factors of production stay in country

8. Objective 8: Describe the objectives and functions of the World Trade Organization.

Define WTO:

The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

Aims of the WTO:

Increase intl. trade by lowring trade barriers and providn a forum for negotioants

Functions of the WTO:

-admin. wto trade agreements

 - be a forum for negotiation

 - handle trade disputes

 - monitor trade policies

 - provider assistence and training for developing copuntries

 - coop with other countries

Bellwork for oct 7th - oct 18th

1)absalute advantage 2)WTO 3) goals 4) members

1/3 B
3A
1/2B
2b

Egypt should prod A and tunisia B

A=20 (2.5)=50
B= 0.5 (30) 12
2.5 = rat of excnanch

WToÆ less rules
resolves disputes
les barriers
assistance
trade policies

non members- vatican, emen egypt

member- egypt canada italy

the rules are strict

STAMP UP

HL2 BW 017

1.     Absolute advantage- Production of a good if it can produce it using fewer resources than another country

Comparative advantage- If a country can produce a good at a lower opp. cost than another country

2.     Reciprocal absolute advantage- If you have reciprocal absolute advantage. The country should specialize in that good/service.

3.     What gives a country comparative advantage- The endowment of resources

Limitations-

1. It is assumed there is perfect knowledge

2. assumed there is no transport costs

3. assume that there are only 2 economies producing 2 goods

4. assumed that costs of not change with economies or diseconomies of scale

5. goods traded are assumed to be identical

6. factors of production stay in country

7. assumed there is perfect free trade

HL-2 BW 016

1)International trade is the exchange of goods and services between countries. Such as China selling potassium to England.
2) 1. lower prices

2. greater choice

3. Differences in resources- some countries need the natural resources to make goods or for survival

4. economies of scale- when there is international trade there is a larger market thuse level of prod. will increase

5. increased competition- leads to greater efficiency

6. More efficient allocation of resources 

7. source of foreign exchange

Why do countries trade

Why do countries trade

The gains from international trade	International trade is the exchange of goods and services between countries. Gains: 1. lower prices 2. greater choice 3. Differences in resources- some countries need the natural resources to make goods or for survival 4. economies of scale- when there is international trade there is a larger market thuse level of prod. will increase 5. increased competition- leads to greater efficiency 6. More efficient allocation of resources 7. source of foreign exchange
Comparing advantage theory	Absalute advantage- Production of a good if it can prodiuce it using fewer resoucres than another country. Comparative advantage- If a country can produce a good at a lower opp. cost than another country
What gives a country a comparative advantage	Utilizing a countries untapped abundant recources
Limitations	1. It is assumed there is perfect knowledge 2. assumed there is no transport costs 3. assume that there are only 2 economies producing 2 goods 4. assumed that costs fo not change with economis or diseconomies of scale 5. goods traded are assumed to be identical 6. factores of production stay in country 7. assumed there is perfect free trade
The world trade organiaztion (wto)	40- 4 % Golbal trade organization
Aims of the WTO	Lower trade barriers and provide forum for negotioation - admin. wto trade agreements - be a forum for negotiation - handle trade disputes - monitor trade policies - provider assistence and training for developing copuntries - coop with other countries

IB hk2 BW015

a.     positives-

Increase standards of living

can get out of the poverty cycle

negatives-

High opp. Cost

loss of incentive to work

Does not effect the GDP

Can increase the unemployment rate

b.     Positives-

Will support those poverty

Positive externality of production

Increase in standards of living

Negatives-

High opp. Cost

c.      Postives-

Increase consumption of merit goods

Can support businesses that would otherwise fail

Negatives-

Inefficiency

Opportunity costs