ECON 1000 Chapter Notes - Chapter 7: Export Subsidy, Economic Surplus, Fundamental Interaction
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ECON 1000 Full Course Notes
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The goods and services that we buy from other countries are imports, and the goods and services that we sell to people are our exports. Comparative advantage is the fundamental force that drives international trade. It is the situation in which a person can perform an activity or produce a good or service at a lower opportunity cost than anyone else. National comparative advantage is when a national c an perform an activity or produce a god or service at a lower opportunity cost than any other nation. We measure the gains and losses from imports by examining their effects on consumer surplus, produce surplus, and total surplus. Governments use four sets of tools to influence international trade and protect domestic industries from foreign competition: Tariffs: a tax on a good that is imposed by the importing country when an imported good crosses its international boundary.