International trade represents the exchange of all   and   between   country and another.

exchange  goods  services  different  one 

The gains from international trade include     for consumers, greater     for consumers, the ability of producers to benefit from economies of scale, the ability to acquire needed resources, a more efficient allocation of resources, increased competition, and a source of foreign exchange. 

 prices  currency  choice  quality  lower 

   is a trade policy that does not restrict imports or exports; it can also be understood as the free market idea applied to international trade.

trade  Free  Fair 

   represents the next best option foregone, so if a nation decides to  in the production of one good or service, they use up resources which will prevent them from using them in the production of another.

Absolute  Opportunity  cost  advantage  specialise  Comparative 

A nation enjoys   , over a different nation, when they are able to produce a good or service at a lower unit cost.

absolute  opportunity  cost  advantage  specialise  comparative 

  - an economic term that refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners.

 Absolute  opportunity  cost  advantage Comparative 

Sources of     include geography, labour ( a large unskilled labour force), capital and economies of scale: a comparative advantage gained as a result of specialisation.

absolute  opportunity  cost  advantage  comparative 

The limitations of comparative advantage theory include the presumption that each nation enjoys        of what to produce, the presumption of   returns to scale in its calculations, the ignoring of    costs and / or         in its calculations and the presumption that the quality of goods and services is constant.

  perfect  trade  constant  higher  administrative  transport  barriers  knowledge 

  - a tax placed on an imported good or service, put in place to protect domestic industries, but also as a method of raising      .

revenue  tax  Quota  Tariff  Red tape 

represents a limit on the numbers or value of a good or service that a country will allow into the country, either a quota representing the total volume of a specific product that is allowed into the country, or broken down by country.

domestic  Subsidy  quota  Tariff  Red tape 

  - rather than penalising cheap imported products a domestic subsidy instead provides financial incentives for domestic firms to compete with low priced goods and services produced overseas.

Domestic  subsidy  Quota  Tariff  Red tape 

Red tape / bureaucratic barriers - another option for governments wishing to protect their own domestic firms.  These are sometimes called     as officially they do not exist.

 tariff  barriers  hidden  import