trade long quiz

• TARIFFS - taxes imposed by governments on imported (sometimes exports) goods
• 1. Specific tariff — fixed taxes levied on a per-unit basis. 
• GOVERNMENT PURCHASES – govt intentionally buy goods or services
• Ad valorem tariff — tariffs are calculated as a percentage of the value of the imported or exported goods. Ad valorem tariffs can vary based on the value of the goods, and they are commonly used in international trade.
• • SUBSIDIES government payment to domestic producers
• LOW INTEREST LOAN – financial assistance by govt to domestic industries in the form of loans with low interest/tubo
• CASH GRANTS – direct financial assistance by govt to domestic industries
• TAX BREAKS – aka tax incentives or tax deductions
•  tax breaks - reductions in the amount of taxes that individuals or businesses owe to the govt
• Quota rent - the extra profit that producers make when supply is artificially limited by an import quota
• Tariff rate quotas - hybrid of a quota and a tariff where a lower tariff is applied to imports within the quota than to those over the quota
•  Import Quota - restrict the quantity of some good that may be imported into a country. 
•  Local Content Requirements - demand that some specific fraction of a good be produced domestically.
• Voluntary Export Restraints — quotas on trade imposed by the exporting country, typically at the request of the importing country’s government
• Administrative Policies -bureaucratic rules designed to make it difficult for imports to enter a country 
• Antidumping Policies (countervailing duties) - designed to punish foreign firms that engage in dumping and protect domestic producers from “unfair” foreign competition.
• dumping - selling goods in a foreign market below their costs of production, or selling goods in a foreign market below their “fair” market value.
•  Economic arguments - concerned with boosting the overall wealth of a nation
• Political arguments - concerned with protecting the interests of certain groups within a nation, often at  the expense of other groups
• Free trade occurs when governments do not attempt to restrict what citizens can buy from another country or what they can sell to another country. While many nations are nominally committed to free trade, they tend to intervene in international trade to protect the interests of politically important groups.
• Experience produce competitive advantage over those without experience in any

  endeavor. 
• International economies of scale - economies that are unique to a firm. For instance, a firm may hold a patent over a mass production machine, which allows it to lower its average cost of production more than other firms in the industry. 
• External economies of scale - economies of scale enjoyed by an entire industry. If studies indicate that cotton production will need 1,000 workers to be able to enter a trade with a foreign country, or those engaged in cotton production will try their best to employ 1,000 workers to become competitively advantaged. 
• Economies of scale - proportionate saving in costs (cost advantage) gained by an increased volume of production. 
• cost advantage is a result of spreading the total fixed overhead cost among a greater number of units produced, which, therefore, reduces the unit fixed cost for the product.
• Patent - exclusive right granted for a new, inventive, and useful product, process, or technical improvement to an existing invention. 
• trademark/brand name - a group of words, sign, symbol, or a logo that distinguishes your business’ goods or services from those of other traders, 
• trademarks are used for franchising.
• Copyright - exclusive legal right to reproduce, publish, sell, or distribute the matter and form of something (such as literary, musical, or artistic work). 
• patent is used for licensing
• • Research and development - activities engaged in by companies for the invention of new products or services to remain competitive. 
• intellectual property - creations of the mind, a work or invention that is the result of creativity, such as manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, brand name, and the like.
• Barriers to entry - obstacles a new firm may face when trying to enter into an industry
• Global Strategic Rivalry Theory was formed Paul Krugman and Kelvin Lancaster in 1980
• Global Strategic Rivalry Theory - the theory focused on multinational corporations (MNCs) and how they get competitive advantage over other firms in their industry. 
• Product life cycle management (PLM) is the process of managing a product’s life cycle from inception, through design and manufacturing, to sales, service, and eventually, to retirement.
• When a product moves on curve, strategies related to competition, distribution, pricing, promotion, and market intelligence are periodically assessed and modified as needed.
• decline stage - when no amount of marketing or promotion can keep the sales figures from declining.
• growth stage

  • demand for the product begins to increase and sales usually grows exponentially from the takeoff point. 
  • profitability reaches the highest level
  • economies of scale are now in order as sales revenue increases
• maturity stage

  • sales increase continues in a decreasing pattern, but the sales curve tends to decrease after the top selling point is reached. 
  • retaining customer brand loyalty is the key.
  • the biggest challenge is maintaining profitability and preventing sales from further decline.