Prohibition
Why Trade With Other Countries?
Absolute advantage-producer has this if they can produce more of a good or service than the other with the same amount of resources
Ex. Ecuador has a good source of climate and terrain for growing coffee, cocoa, and bananas, therefore if has an absolute advantage over the United States in producing those products
Comparative advantage-one can produce a good or service at a lower opportunity cost, but both produce the …
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…of cheap foreign labor
Terms of trade-the price of exports relative to the price of imports
-Countries improve the terms of trade to increase the purchasing power in the international marketplace
-Either reducing the import price or increasing the export price can alter this
Mercantilists-these people believed that a country should export more than they import, started in England with Queen I
neomercantilists-believe the same as mercantilists, but are people the present day and time
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