Understanding International Trade Restrictions and Economic Balance
International Trade Restrictions
Free trade worldwide faces restrictions. Some countries impose barriers to limit the entry of specific products, often to protect domestic industries.
These protective measures, also known as state intervention, can take various forms:
- Customs duties or tariffs
- Import quotas
- Export subsidies
Customs Duties (Tariffs)
Customs duties are import taxes, called tariffs, that restrict the entry of certain goods. This protects domestic industries or serves as a sanitary measure,
Read MoreCore Economic Concepts: Income Flow, Production, Distribution
Circular Flow of Income
The circular flow of income describes the set of relationships between economic agents, primarily involving:
- The payment of income from companies to families in exchange for work and other productive factors.
- The payment of prices from families to businesses in exchange for goods and services produced by them.
In economies that rely on the market to allocate resources, relationships exist between families, businesses, and the state within two main markets:
- The Market for Goods
Understanding Stolper-Samuelson, Rybczynski, and Factor Price Equalization Theorems
The Stolper-Samuelson Theorem
Under the assumptions that the underlying production technology exhibits constant returns to scale and that both goods are produced, an increase in the price of one good leads to an increase in the real income of the factor that is used intensively in producing that good, and lowers the real income of the other factor. Trade results in the rising of the price of the good which uses intensively the abundant factor that earned relatively low in autarky. Since demand for
Read MoreCommerce and Transportation: A Deep Dive
Trade and Transport
1. Commercial Activity: Internal Trade
Trade: The exchange (buying, selling, and renting) of goods and services for money.
1.1. Internal Trade
The importance of commercial activity can be viewed from two perspectives: social and economic development.
There are two types of trade:
- Wholesale: The acquisition of large quantities of goods by large companies.
- Retail: The sale of smaller quantities of products directly to consumers by retailers.
1.2. Current Trends
Commercial activity is constantly
Read MoreUnderstanding Key Market Concepts: Demand, Supply, and More
Understanding Key Market Concepts
Market: A set of trading activities of a product based on supply and demand.
Demand: The quantity of goods consumers are willing to buy at a specific price, considering the prices of related goods, disposable income, and tastes or preferences.
Demand Curve: The graphical representation of the demand function, illustrating the different quantities of a good that buyers are willing to purchase at each price.
Supply Curve: The graphical representation of the supply function,
Read MoreUS Economy: Roaring Twenties, Crash, and New Deal Recovery
The Roaring Twenties in the United States
The twenty years leading up to the 1920s in the United States underwent an impulse for new industries and the development of new energy sources:
- New Industries: Automobile, electrical manufacturing, domestic electronics, chemistry, and aeronautics.
- New Energy Sources: Electricity and oil.
The automobile industry was the symbol of the new times. Mass production also emerged. The development of electric motors and internal combustion facilitated the mechanization
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