International Trade

Definition

International trade refers to the exchange of goods and services between countries. It allows countries to specialize in producing what they are most efficient at, and then trade with other countries for goods and services they need.

Related terms

Trade Quotas: Trade quotas are restrictions placed on the quantity or value of goods that can be imported or exported between countries. They are used by governments to control the amount of foreign competition faced by domestic industries.

Tariffs: Tariffs are taxes imposed on imported goods. They increase the price of foreign products, making them less competitive compared to domestically produced goods.

Comparative Advantage: Comparative advantage is when a country can produce a good or service at a lower opportunity cost than another country. It forms the basis for specialization and gains from trade in international economics.