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Autarky
self-sefficency: a country that is nor participating in international trade
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Mercantilism
political and ecomonic policy in the 17th and early 18th centuries ained at increasing a nation's wealth and power by encouraging the export of goos in return for gold
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Absolute advantage
a country that is capable of producing a product with fewer labor hours.
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division of labor
the practice of subdividing a production process into stages that can then be performed bt labor repeating the process, as on a production line.
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Comparative advantage
the ability to produce a good or service more cheaply, relative to other goods and services, than is possible in other countries.
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Prodctions possiblility frontier
a theoretical mehtod of representing te total productive capablilities of a nation used in the formulation if classical and modern trade theory.
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Opportunity cost
the cost incurred by a form as the result of takinf one acion rather than another
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Factor intensities
Factor proportions
the proportion of capital input to labor input used in the production of a good.
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Factor Proportions Theory
systematic explaination of the source of comparative advantage.
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input-output analysis
the method for estimating market activities and potential that measures the factor inflows into a production and the resultant outflow of products
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Leontief Paradox
Wassily Leontief's studies indicated that the united states was a labor abundant country, exporting labor intensive products. This was the paradoxbecause of the general belief that the united states was a capital abundant country that should be exporting capital abundant products.
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Market segment
overlapping ranges of trade targets woth common ground and levels of sophistication
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product cycle theory
- the thoery that veiws products as passing through four stages
- 1.introduction
- 2.growth
- 3.maturity
- 4.Decline
- which the location of product move from industrialized to lower cost developing nations
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internal economies on scale
when the cost perunit of the product of a single firm continues to fall as the firm's size continues to increase
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abandoned product ranges
the outcome of a firm narrowing its range of products to obtain economies of scale, which provides opportunites for other firms to enter the market for the abandoned products
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intra-industry trade
the similtaneous export and inport of the same good by a country. it is of intrest, due to the traditional theory that a country will either export of import a good, but not do both at the same time.
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Product differentiation
the effort to build unique differences or improvments into products
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Foreign Direct investment
the establidhment or expansion of operation of a firm in a foreign country. Like all investments it assumes a transfer of capital
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import substitution
a policy for economics growth adpted by many developing countries that involves the systematic encouragement of domestic production of goods formerly imported
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internalization
occurs when a firm establishes its own multinationaloperation, keeping information that is at the core of it competitiveness within the firm
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