4.1.3 Patterns of trade

• What are patterns of trade shaped by?

  Key economic factors
• What are examples of trade barriers?

  Tariffs and non-tariff measures
• How does technology influence trade patterns?

  Increases productivity and efficiency
• Absolute advantage refers to producing a good more efficiently using fewer inputs
• Match the factor endowment with its impact on comparative advantage:

  Land ↔️ Agricultural products

  Labor ↔️ Labor-intensive industries

  Capital ↔️ Capital-intensive industries

  Technology ↔️ High-tech products
• Government policies such as tariffs and subsidies can influence trade patterns.


  True
• A country with an absolute advantage in all goods will not benefit from trade.

  False
• How does technology affect comparative advantage?

  Increases productivity and lowers opportunity costs
• Match the factor with its impact on trade according to the Gravity Model of Trade:

  Market Size ↔️ Increases trade between countries

  Proximity ↔️ Decreases trade costs and enhances trade flows
• The gravity model of trade explains trade patterns based on country size and distance
• Countries with rich natural resources export them, leading to specialization
• Why do countries specialize in goods where they have a comparative advantage?

  To increase efficiency
• How does advanced technology impact comparative advantage?

  Lowers opportunity costs
• Advanced technology can give a country a comparative advantage in high-tech and innovative products.


  True
• Advanced technology increases productivity and allows countries to produce goods more efficiently
• Comparative advantage refers to producing a good at a lower opportunity cost than another producer.
• Countries with abundant resources have a comparative advantage in producing goods that use those resources
• Factor endowments include land, labor, capital, and technology.
• Tariffs are taxes imposed on imported goods to increase their price domestically.
• Patterns of trade are influenced by geography, resource endowments, technology, and government policies.
• A country with an absolute advantage may still benefit from trade by specializing in its comparative advantage.
• A country with an absolute advantage in all goods does not benefit from trade.

  False
• Abundant arable land leads to competitive agricultural exports
• Tariffs are taxes on imported goods that increase their price
• The North American Free Trade Agreement (NAFTA) was replaced by the USMCA
• Factor endowments play a role in shaping trade patterns.


  True
• How does geography impact trade patterns?

  Resource access and trade routes
• Comparative advantage is the ability to produce a good at a lower opportunity cost.


  True
• Countries with abundant resources have a comparative advantage in producing goods that use those resources.


  True
• What type of industries do countries with a large, skilled workforce have a comparative advantage in?

  Labor-intensive industries
• Which country exports high-tech manufactured goods due to its advanced technology?

  Japan
• Why does Japan import iron ore from Australia?

  Lack of domestic resources
• What is absolute advantage in trade?

  Efficient use of inputs
• Factor endowments, such as land and labor, shape a country's comparative advantage.


  True
• What does the Gravity Model of Trade posit?

  Trade is related to economic size and inversely related to distance
• How do tariffs affect trade patterns?

  Make domestic goods more competitive
• In the example provided, which country has a comparative advantage in wheat?

  Country A
• Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost
• What are the four types of factor endowments that shape a country's comparative advantage?

  Land, labor, capital, technology
• What does the Gravity Model of Trade suggest about the relationship between trade, economic size, and distance?

  Trade increases with GDP and decreases with distance