Mrs. Samples2009/2010

Social Studies

SS7E6a

Explain how specialization encourages trade between countries

Every country can’t produce all the goods and services they need

Countries specialize in producing goods and services that they can provide efficiently.

They sell these goods and service to countries who need them

The money made goes to purchase goods and services the first country needs but could not produce

Countries produce products they can make cheaply, sell them, take the $ and buy what they need.

Some countries are rich in oil but don’t have farmland to produce crops.

Ex. Saudi Arabia specializes in the production and sale of oil and gas. They then take the $ from the sale of oil and gas and purchase food and technology needed to make their agriculture system more efficient

Israel has little oil but the they are leaders in agricultural technology. They sell this technology to earn $ to purchase foods.

1. What is “economic specialization”?A. directly swapping goods from one country to

another without having to use moneyB. trying to avoid investing in industry and

technology because of the expense involvedC. producing all goods and services needed for

a country’s growth, so that trade with other countries is not needed.

D. producing goods a country can make efficiently so they can trade them for goods made by others that cannot be produced locally

2. Saudi Arabia specializes in the production of

A. oil and gas B. oil and sugar C. olive and orange D. beef and chicken

3. Israel specializes in A. Medical technologies

B. Industrial technologiesC. Scientific technologiesD. Agricultural technologies

Compare and contrast different types of trade

barriers

Trade barriers are anything that slows down or prevents one country from exchanging goods with another country.

Some are put in place to protect local industries from lower priced goods from another country

Political problems is another reason for a trade barrier

A tax placed on goods from another country

Makes the imported item more expensive than a similar local product - “protective tarriff”

Limits the amount of foreign goods coming into a country

Set a specific # or amount of a particular product that can be purchased during a given time period

Ex. Israel could decide that only 1500 Japanese cars could be imported that year; that would make it more likely that people would purchase Israeli-make cars

An embargo is when one country refuses to trade with another country in order to isolate the country and cause problems with that country’s economy.

Ex. OPEC decided to stop all sales of oil and gas to countries supporting Israel in the 1973 Arab-Israeli war (The US was one of the countries)

1. What is a tariff?A. A tax paid by the purchaser when goods

are soldB. A tax placed on goods coming into one

country from anotherC. A tax placed on goods made by local

craftsmen or manufacturersD. A tax paid when goods are shipped from

one state to another in the United States

2. What is a quota?A. A decision to prevent certain goods from

being importedB. A tax placed on imported goods when

they enter the countryC. A tax placed on goods when they are

purchased in the market placeD. A limit to the number or amount of a

foreign-produced good that is allowed into a country

3. What is an embargo?A. A tax placed on goods coming into the

country from overseasB. A limit to the amount of a certain good

allowed into the countryC. A tax paid by the producer before he can

sell his goods in another countryD. A formal halt to trade with a particular

country for economic or political reasons

Explain the primary function of the Organization of Petroleum Exporting countries (OPEC).

Created in 1960 by some of the countries with large oil supplies who wanted to work together to regulated the supply and price of the oil they exported to other countries

The 1st 5 countries were Iran, Iraq, Venezuela, Kuwait, and Saudi Arabia

They determine how much oil they will produce which determines the price on the world market.

The less they produce the higher the price, the more they produce the lower the price

1. Why was OPEC created?A. To regulate the supply and price of oilB. To design new machinery to get oil out of

the groundC. To help the Palestinians in their problems

with IsraelD. To keep countries that are not members

from producing any oil

2. What happens to the price of oil when OPEC countries decides to limit production?

A. Prices riseB. Prices dropC. Prices stay the sameD. Oil stops being sold

3.Where are most of the OPEC countries located?

A. AfricaB. South AmericaC. North AmericaD. Southwest Asia