课后习题(Final).doc

Key Terms 01.Autarky Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems. Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade. If a self-sufficient economy also refuses all trade with the outside world then it is called a closed economy. 02.Community indifference curve A community indifference curve shows the various combinations of two commodities that yield equal satisfaction to the community or nation. Higher curves refer to greater satisfaction, lower curves to less satisfaction. Community indifference curves are negatively sloped and convex from the origin. To be useful, they must not cross. 03.Deindustrialization Deindustrialization is a process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region, especially heavy industry or manufacturing industry. It is the opposite of industrialization. 04.Equilibrium-relative commodity price in isolation The equilibrium-relative commodity price in isolation is given by the slope of the common tangent to the nation’s production frontier and indifferent curve at the autarky point of production and consumption. Thus, the equilibrium-relative commodity price in isolation is PA =PX/PY=1/4 in Nation 1 and PA’ =PX/PY=4 in Nation 2.(see Figure 3.3) 05.Gains from exchange 06.Gains from specialization 5-6. A nation’s gains from trade can be broken down into components: the gains from exchange and the gains from specialization. 07.Incomplete specialization Incomplete specialization means production of goods that compete with imports. In contrast, under increasing opportunity costs, there is incomplete specialization in production in both nations. 08.Increasing opportunity cost Increasing opportunity cost mean that the nation must give up more and more of one commodity to release just enough resources to produce each additi