Notes On Economics And International Trade Theory

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1. Scarcity: Insufficiency or shortness of supply; dearth.

2. Opportunity Cost: The money or other benefits lost when pursuing a particular course of action instead of a mutually-exclusive alternative

3.Supply: The quantity of a commodity that is in the market and available for purchase or that is available for purchase at a particular price.

4. Demand: The desire to purchase, coupled with the power to do so; the quantity of goods that buyers will take at a particular price.

5. Price: The quantity of payment or compensation given by one party to another in return for goods or services.

6. Absolute Advantage: An economy can produce a good for lower costs than another. It means that less resources are needed to produce the same amount of goods.

7. Comparative Advantage: The benefit or advantage of an economy to be able to produce a commodity at a lesser opportunity cost than other entities is referred to as comparative advantage in international trade theory.

8. Import: A good or service brought into one country from another. Along with exports, imports form the backbone of international trade. The higher the value of imports entering a country, compared to the value of exports, the more negative that country 's balance of trade becomes.

9. Export: A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade.

10. Free trade: Also called laissez-faire, a policy by which a government does not

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