incomplete specilization is caused by the presence of increasing opportunity costs--results in a curved production possibility frontier

if costs were constsnt then the curve would be a strait line

Protectionist policies: policies that restrict trade in order to protect domestic producers. (prevents foreign imports)

Ad valorem tax: tax equal to a percentage value of the good

specific tariff: a tax on imports that is proportional to the number of units or items imported--tax benefits gov

import demand curve: a curve showing the quantity of imports demanded at various prices

export supply curve: a curve showing the quantity of exports supplied at various prices

quota: an upper limit on the quantity of a good that may be imported or sold

--benefits the producers who hold the quotas

inter industry trade: international trade in goods from different industries

intra industry trade: international trade in goods from similar or the same industries

voluntary restraint agreement: a countries self imposed government restriction on exports to a particular country

voluntary import expansion: a government agreement to expand imports from a particular country.

Revenue tariff: an import tax whose main purpose is to provide revenue to the government

Smoot-Hawley tariff: a set of tariffs imposed in 1930 that raised the average terrify level to 59% by 1932

Trade war: a conflict among nations over trade policies caused by imposition of protectionist policies on the part of one country and subsequent retaliatory actions by other countries.

reciprocal trade agreement act: passed in 1934 by congress, allowed the president to cut tariff by rates similar to those cut by reciprocating countries

General Agreement on Tariffs and Trade: (GATT) international treaty organization designed to promote mutual reductions in tariffs and other trade barriers

antidumping duty: a tariff imposed on a country as a penalty for dumping goods

dumping: the selling of goods by foreign firms at a price below average cost or below the price in the domestic country.

non tariff barrier: any government action other than a tariff that reduces imports, such as a quota or standard.

strategic trade policy: a set of government actions designed to encourage large firms to locate or start up in a country.

infant industry argument: the view that a new industry may be helped by protectionist policies

unilateral disarmament: in trade policy, the removal of trade barriers by one country without recripocal action on the part of other countries.

multilateral negotiation: simultaneous tariff reductions on the part of many countries

Urguay round: the most round of negotiations on the General Agreement on Tariffs and Trade, began in 1986 in Uruguay.

World Trade Organization: an international organization that can mediate trade disputes

most-favored nation (MFN) : the principal by which all countries involved in GATT negotiations receive the same tariff rates as the country with the lowest negotiated tariff rates

trade diversion: the shifting of trade away from the low cost producer toward a high cost producer because of a reduction in trade barriers with the country of the higher cost producer.

trade creation: the increase in trade due to decrease in trade barriers

free trade area: (FTA) an area that has no trade barriers between the countries in the area

customs union: a free trade area with a common external tariff

domestic content restriction: a requirement that a fraction of the product must be produced within the area to qualify for zero tariffs between the countries in the free trade zone

managed trade : a situation in which a government takes actions to promote or restrict trade in certain goods, usually by setting targets for exports or imports