Gains From Trade

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Exports: The Economic Impacts of Selling Goods to Other CountriesImports: The Economics Impacts of Buying Goods from Other CountriesCosts of Trade Gains from TradeInternational Trade > Gains from Trade

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www.boundless.com/economicsExport is defined as the act of shipping goods and services out of the port of a country.Legal restrictions and trade barriers are in place internationally to control trade, whether goods are being exported or imported.When legal restrictions and trade barriers are lessened or lifted the producer surplus increases and so does the amount of the goods and services that are exported from the country.Exporting allows a country's producers to gain ownership advantages and develop low-cost and differentiated products.Due to an extra layer in the chain of distribution which squeezes the margins, exporters may have to offer lower prices to the importers than to domestic wholesalers in order to move their product and generate business.Exports: The Economic Impacts of Selling Goods to Other Countries

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International Trade > Gains from Trade

Imports are defined as purchases of good or services by a domestic economy from a foreign economy.Protectionism is the economic policy of restraining trade between countries through tariffs on imported goods, restrictive quotas, and government regulations.In most countries, international trade and importing goods represents a significant share of the gross domestic product (GDP).International trade is generally more expensive than domestic trade due to additionally imposed costs, taxes, and tariffs.On a business level, companies take part in direct-imports; a major retailer imports goods from an overseas manufacturer in order to save money.Imports: The Economics Impacts of Buying Goods from Other Countries

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International Trade > Gains from Trade

Free trade eliminates export tariffs, import quotas, and export quotas; all of which cause more losses than benefits for a country.With free trade in place the producers in exporting countries and the consumers in importing countries all benefit.One of the main disadvantages is the selective application of free trade.Economic inefficiency can be created through trade diversion.Trade restricts displaces workers, makes overcoming unemployment challenging, increases economic inequality, and can lower wages.When free trade is applied to only the high cost producer it can lead to trade diversion and a net economic loss.Another disadvantage is that by increasing returns to scale, can cause certain industries to settle in an geographically area where there is not comparative advantage.Costs of Trade

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International Trade > Gains from Trade

Free to share, print, make copies and changes. Get yours at www.boundless.comAppendixKey termsexport Any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade.free trade International trade free from government interference, especially trade free from tariffs or duties on imports.import To bring (something) in from a foreign country, especially for sale or trade.protectionism A policy of protecting the domestic producers of a product by imposing tariffs, quotas or other barriers on imports.tariff A system of government-imposed duties levied on imported or exported goods; a list of such duties, or the duties themselves.trade Buying and selling of goods and services on a market.trade Buying and selling of goods and services on a market.welfare Health, safety, happiness and prosperity; well-being in any respect.

Free to share, print, make copies and changes. Get yours at www.boundless.comInternational TradeExportsThe map shows the primary exporters for countries around the globe.The colors indicate the leading merchandise export destination for the indicated country (the United States main export destination is the European Union).Exporting is the act of shipping goods and services to other countries.

Free to share, print, make copies and changes. Get yours at www.boundless.comWikipedia. "Key export markets." CC BY-SA http://en.wikipedia.org/wiki/File:Key_export_markets.png View on Boundless.comInternational Trade

ImportsThe map shows the largest importers on an international scale.The color indicates the leading source of merchandise imports for the indicated country (the United States' imports the largest percentage of its goods from China).Imports account for a significant share in the gross domestic product (GDP) of a country.

Free to share, print, make copies and changes. Get yours at www.boundless.comWikipedia. "Key import sources." CC BY-SA http://en.wikipedia.org/wiki/File:Key_import_sources.png View on Boundless.comInternational Trade

TariffsThis image shows what happens to societal welfare when free trade is not enacted.Tariffs cause the consumer surplus (green area) to decrease, while the producer surplus (yellow area) and government tax revenue (blue area) increase.The amount of societal loss (pink area) is larger than any benefits experienced by the producers and government.Free trade does not have tariffs and results in net gain for society.

Free to share, print, make copies and changes. Get yours at www.boundless.comWikipedia. "EffectOfTariff." CC BY-SA http://en.wikipedia.org/wiki/File:EffectOfTariff.svg View on Boundless.comInternational Trade

Free to share, print, make copies and changes. Get yours at www.boundless.comInternational TradeAssume that France lifts trade barriers that prevented wine makers from exporting wine. What would you expect to happen?A) Consumer surplus growsB) Total surplus shrinksC) Producer surplus growsD) Total surplus stays the same

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International TradeAssume that France lifts trade barriers that prevented wine makers from exporting wine. What would you expect to happen?A) Consumer surplus growsB) Total surplus shrinksC) Producer surplus growsD) Total surplus stays the same

Free to share, print, make copies and changes. Get yours at www.boundless.comInternational TradeWhat will happen to a good if a country transitions from a policy of protectionism to a policy of free trade and begins importing goods from abroad?A) Prices will decrease and the quantity consumed will decreaseB) Prices will decrease and the quantity consumed will increaseC) Prices will incre