COMMERCE 1E03 Chapter 5: Chapter 5 - Competing in Global Markets
10 Feb 2012
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Exporting: selling goods and services to another country. Importing: buying goods and services from another country. No country can produce all of the products that its people want and need. Even if a country did become self sufficient, other nations would seek to trade with that country to meet the needs of their own people. Some nations have an abundance of natural resources and a lack of technological know-how, while others have sophisticated technology but few natural resources. Free trade: the movement of goods and services among nations without political or economic obstruction. Comparative advantage theory: states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently. Absolute advantage: the advantage that exists when a country has the ability to produce a particular good or service using fewer resources than another country.
