Intro to Business

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Importing

buying products from another country

Exporting

the selling of products to another country

Who is the largest importer in the global market today?

The United States

In volume of exports, the three leading nations are

The United States, Germany, and China

The world market is approximately

7 billion potential customers

Which of the following continents is home to the largest percentage of the world’s population?

Asia

A nation has a ___________ in the production of a good or service if it can produce that good or service more effectively or efficiently than it can produce other goods.

comparative advantage

__________ occurs when a country has a monopoly on producing a product or is able to produce it at a cost well below that of all other countries.

Absolute advantage

The theory of comparative advantage exists because:

no nation can produce all the products its people want and need.

The concept of free trade means:

goods and services can be traded freely across borders without political and/or economic barriers.

One advantage of free trade is

innovation for new products occurs which keeps firms competitively challenged.

Free trade between nations generally results in:

mutually beneficial exchange relationships.

A free trade agreement is likely to result in

an increase in imported goods and services

The movement of goods and services among nations without political or economic barriers

free trade

States that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products it cannot produce as effectively or efficiently

comparative advantage theory

If it has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries

absolute advantage

the total value of a nation’s exports compared to its imports measured over a particular period.

The balance of trade

the difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows coming into or leaving a country from other factors such as tourism, foreign aid, military expenditures, and foreign investment.

The balance of payments

the practice of selling products in a foreign country at lower prices than those charged in the producing country

dumping

involves a foreign company producing private-label goods to which a domestic company then attaches its own brand name or trademark

contract manufacturing

a partnership in which two or more companies (often from different countries) join to undertake a major project

A joint venture

a long-term partnership between two or more companies established to help each company build competitive market advantages

A strategic alliance

the buying of permanent property and businesses in foreign nations

foreign direct investment

an organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management

A multinational corporation

an attitude that one’s own culture is superior to all others. In contrast, foreign businesspeople are very good at adapting to U.S. culture

ethnocentricity

the value of one nation’s currency relative to the currencies of other countries

exchange rate

lowering the value of a nation’s currency relative to other countries

devaluation

a complex form of bartering in which several countries may be involved, each trading goods or services for services

countertrading

the use of government regulations to limit the import of goods and services

trade protectionism

taxes on imports, thus making imported goods more expensive to buy

tariffs

limits the number of products in certain categories that a nation can import

An import quota

a complete ban on the import or export of a certain product or the stopping of all trade with a particular country

An embargo

an international forum for negotiating mutual reductions in trade restrictions

General Agreement on Tariffs and Trade

to assume the task of mediating trade disputes among nations

World Trade Organizations

a regional group of countries that have a common external tariff, no internal tariffs, and the coordination of laws to facilitate exchange among member countries

A common market

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