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					   International Trade
     Definitions and
        Concepts
Intro. to World Agricultural Science
           and Technology
             Fall 2002
             Ms. Bailes
 What on Earth Does This
         Mean?
U.S. trade with Mexico and Canada is up as a
result of NAFTA.
Agriculture accounts for 7% of Malaysia’s GDP.
Per capita consumption of rice in Indonesia is
1,600 pounds per year.
Exports to China were down in 1999 due to
lasting impacts of the Asian economic crisis.
France has declared a ban on imports of beef
products from Argentina due to recent FMD
outbreaks.
     Today’s Objectives

Define terms important in discussing
international trade
Differentiate between exports and imports
Explain the difference between comparative
advantage and absolute advantage
Identify potential gains from international
trade of agricultural products
       Terms to Know

Trade - an exchange of products
Export - a good transported away from
the area
Import - a good transported into the
area
Domestic - relating to one’s own
country
  Terms to Know, cont.

Commodity - an economic good
produced by agricultural or mining
industries
GDP - Gross Domestic Product - total
value of a nation’s annual output of
goods and services
Per capita - per person
   Terms to Know, cont.


Comparative Advantage -a nation will
specialize in the production and export
of goods that they can produce
cheaper than other countries due to
their favorable conditions
 Comparative Advantage
Austria and Hungary both produce sugar
beets and potatoes.
Austria can produce sugar beets for
$0.50 / lb. and potatoes for $0.30 / lb.
Hungary can produce sugar beets for
$0.45 / lb. and potatoes for $0.15 / lb.
What will Hungary decide to specialize in?
What will Austria specialize in?
 Comparative Advantage

Hungary will specialize in potatoes.
Austria will be able to specialize in
sugar beets.
Austria will import potatoes from
Hungary for $0.25 / lb.
Hungary will import sugar beets from
Austria for $0.35 / lb.
Everyone will benefit.
   Terms to Know, cont.


Absolute Advantage - a nation will
export goods certain goods because it
can produce it cheaper than all other
nations or other nations are unable to
produce it
 Potential Gains from
  Agricultural Trade
Specialization in Goods of Efficient
Production
Gain from Exchange of Goods
High Quality Goods
Diversity of Selection
Higher Export Prices
Lower Import Prices
Increases Standard of Living

				
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posted:5/12/2013
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