ARBUS101 Chapter Notes - Chapter 3: Trade Bloc, Import Quota, Starbucks
3 Nov 2017
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Document Summary
Module 1 (ch. 3) - competing in global markets. Free trade - movement of goods & services among nations without political / economic barriers. Comparative advantage theory - a country should sell the products they make the most efficiently. & buy the products they cannot make as efficiently. Absolute advantage - country with monopoly of a product / can produce it better than other countries. Balance of trade - a nation"s ration of exports to imports. Trade surplus - a favourable balance of trade when value of exports > imports. Trade deficit - a unfavourable balance of trade when value of imports > exports. Balance of payments - difference between money coming into the country (exports) and money leaving the country (imports) + money flows from tourism, foreign aid, military expenditures, and foreign investment. Licensing - a firm (licensor) allows a foreign company (licensee) to produce its product in exchange for a fee (royalty)
