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Recommended textbook solutionsEconomics4th EditionJ. Holton Wilson, J.R. Clark 890 solutions Economics: Principles in Action1st EditionArthur O'Sullivan, Steven M. Sheffrin 831 solutions
Principles of Economics7th EditionN. Gregory Mankiw 1,394 solutions Economics New Ways of Thinking, Applying the Principles, Workbook2nd EditionScott Wolla 956 solutions Least to most; amount of commitment, control, risk, and profit potential Licensing a firm allows a foreign company to produce its product in exchange for a fee · Spend little or no money to produce and market their products Exporting · Exporting Assistance Centers- provides hands=on exporting assistance and trade · Exporting Trading Centers- helping companies engage in indirect exporting Franchising- contract agreement where someone with a good idea for a business sells others the rights to use the name and sell a product/service in given area Contract Manufacturing- foreign country's production of private-label goods to which a domestic company then attaches it brand name or trademark; part of outsourcing · Can be used to: (1) allow a company to experiment in a new market without incurring heavy start-up cost (2) temporarily meet an unexpected increases in orders Joint Venture- partnership when two or more companies join to undertake a major project Strategic Alliance- long term partnership between two or more companies established to help each company build competitive market advantages Foreign Direct Investment (FDI)- buying of permanent property and businesses in foreign nations ·Foreign Subsidiaries- company owner in a foreign country by another company - parent company ·Multinational Corporation- organization that manufactures and markets products in many different countries and
has multinational stock ownership and multinational management Theory of Absolute Advantage - Specialization would increase efficiency for three reasons: - Then, a country can use its excess production to buy more imports than it could have produced. IN WHAT PRODUCTS SHOULD A COUNTRY SPECIALIZE? 2. Acquired advantage: "By specializing and trading, global efficiency is optimized, and the two countries can have more coffee and more wheat than they would without trade." * Full employment: the free-trade theories assume that resources are fully employed, but when countries have many unemployed or unused resources, they may restrict imports so that they can employ or use idle resources. * Economic efficiency: countries may have other goals than economic efficiency and avoid overspecialization because of the vulnerability created by changes in technology and by price fluctuations or because they do not trust foreign companies to always supply them with essential goods. * Division of gains: if countries feel that a trading partner is gaining too large a share of benefits, they may prefer to forgo absolute gains for themselves to prevent others from gaining a relative economic advantage. * Transport costs: it may cost more to transport the goods than is saved through specialization, and then, the advantages of trade are negated. * Statics and dynamics: conditions that give countries production advantages and disadvantages might change. Most trade today is due to acquired advantage, to technical dynamics cause countries to gain or lose both absolutely and relatively. * Services: the free-trade theories deal with products rather than services. but the portion of services in world trade is increasing. Providing services also diverts resources from product production. * Production networks: costs are saved by having activities take place (multiple parts of one thing) in those countries where there is an absolute or comparative advantage for their production. * Mobility: assumption that resources can move domestically from the production of one good to another easily and at no cost- is not valid, because different jobs may have different skill needs, or may be less productive if you move them from one job to another. Resources also cannot move easily internationally, although it is becoming more easy recently. However, it is still safe to say that resources are more mobile domestically than they are internationally. * Nontradeable goods: products and services (haircuts, retail grocery distribution, etc.) that are seldom practical to export due to high transportation costs. * Theory of Country Size: * Size of the Economy: * Factor-proportions theory: * People and land * Manufacturing locations * Capital, labor rates, and specialization: * Process technology: * Product technology:
* Country similarity theory: * Specialization and acquired advantage * Product differentiation: * The Effects of cultural similarity: * The effects of political relationships and economic agreements * The effects of distance: * Overcoming distance: The product life cycle theory: 1. Introduction: 2. Growth: 3. Maturity 4. Decline According to the diamond of national competitive advantage theory, companies' development and maintenance of internationally competitive products depends on favorable: 1. demand conditions: 2. Factor conditions: 3. related and supporting industries 4. firm strategy, structure, and rivalry THE FIRST THREE ARE RELATED TO DEVELOPMENT, WHILE THE LAST IS RELATED TO SUSTAINABILITY. What kind of advantage does a country have if it makes a product more efficiently?In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.
What kind of advantage does a country have if they can make a product more efficiently quizlet?Absolute advantage means a country has a monopoly on a certain product or can produce the product more efficiently than any other country.
What is the benefit in reaching the absolute advantage in the production of one good quizlet?What is the benefit in reaching the absolute advantage in the production of one good? c. to produce more units of a good while using fewer resources.
What is an absolute advantage Why does it result in more global trade quizlet?Absolute advantage is when a country can produce more goods effectively and at a lower cost, It does result in more global trade because it makes it easier. Most countries have their own currencies and typically only accept their own currency for business exchanges.
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