Intro to Business Chapter 3 – Flashcards
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Opportunity cost
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The opportunity of giving up the second best choice when making a decision
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absolute advantages
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The benefit of a country has in a given industry when it can produce more of a product than other nations using the same amount of resources.
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Comparative advantages.
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The benefit a country has in a given industry if it can make products at a lower opportunity costs than other countryies
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balance of trade
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A basic measure of the difference in value between a nations exports and imports including both goods and servies.
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trade surplus
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overage that occures when the total value of a nations exports is higher than the total value of its imports.
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trade deficit
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Shortfall that occures when the total value of a nations imports is higher than the total value of its exports.
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balance of payments
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A measure of the total flow of money into or out of a country.
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Balance of payments surplus
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Overage that occurs when more money flows into a nation than out of that nation.
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balance of payments deficit
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shrotfall that occurs when more money flows out of a nation than into that nation.
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exchange rates
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A measurement of the value of one nations currency relative to the currency of other nations.
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countertrade
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international trade that involves the barter of productss for products rather than for currency.
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foreign outsourcing
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(also contract manufacturing) Contracting with foreign suppliers to produce products, usally at a fraction of the cost of domestic production.
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Importing
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Buying products domestically that have been produced or grown in foreign nations.
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exporting
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selling products in foreign nations that have been produced or grown domestically.
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foreign licensing
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Authority granted by a domestic firm to a foreign firm for the rights to produce and market its product or to use its trademakre/patent rights in a defined geographical area.
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direct investment
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(or foreign direct investment) When firms either acquire foreign firms or develop new facilities from the gorund up in foreign countries
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Joint ventures
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When two or more companies join forces - sharing resources, risks, and profits, but not actually merging companies - to pursue specific opportunities.
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Partnership
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A voluntary agreemtn under which two or more people act as co-owners of a business for profit.
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Strategic alliance
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An agreement between two or more firms to jointly pursue a specific opportunity without actually merging their businesses. Typically involves less formall less encompassing agreements than partnerships.
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Sociocultural differences
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Differences amoung cultures in language, attitudes and values.
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Infastructure
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A countrys phsical facilities that support economic activity.
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Protectionism
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National policies designed to restrict international trade. Usually with the goal of protecting domestic business.
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tariffs
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taxes levied against imports.
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Quotas
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Limitations on the amount of specific products that may be imported from certain countries during a given time period.
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Voluntary export restraints (VER's)
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Limitations on the amount of specific products that one nation will export to another nation.
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Embargo
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A complete ban on international trade of a certain item, or a total halt in trade with a particular nation.
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free trade
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The unrestricted movement of goods and servies across international borders.
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General Agreement on Tariffs and Trad (GATT)
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An international trade treaty designed to encourage worldwide trade among its members.
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World Trad Organization (WTO)
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A permanent global institution to promote international trade disputes.
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World Bank
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An international cooperative of 186 member countris, working together to reduce poverty in the developing world.
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International Monetary Fund (IMF)
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An international organization of 186 member nations that promotes interational economic cooperation and stable growth.
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Trading bloc
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A group of countires that have reduced or even eliminated tariffs allowing for the free flow of goods among the members nations.
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Common market
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A group of countries that eliminated tariffs and harmonized trading rules to facilitate the free flow of goods amoung the member nations.
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North American Free Trad Agreement (NAFTA)
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The treaty among the United States, Mexico, and Canada, that eliminated trade barriers and investment restircitons over a 15-year period starting in 1994
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European Union (EU)
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The world's largest common market composed of 27 European nations.
