1. Mrs. Samples 2009/2010 Social Studies
VOLUNTARY TRADE
Mrs. Samples
2009/2010
Social Studies

2. SS7E6a Explain how specialization encourages trade between countries
SS7E6 Students will explain how voluntary trade benefits buyers and sellers in the Middle East.
SS7E6a Explain how specialization encourages trade between countries

3. Specialization
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

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

5. 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.

6. Q & A What is “economic specialization”?
directly swapping goods from one country to another without having to use money
trying to avoid investing in industry and technology because of the expense involved
producing all goods and services needed for a country’s growth, so that trade with other countries is not needed.
producing goods a country can make efficiently so they can trade them for goods made by others that cannot be produced locally

7. Q & A
2. Saudi Arabia specializes in the production of A. oil and gas B. oil and sugar C. olive and orange D. beef and chicken

8. Q & A
3. Israel specializes in A. Medical technologies B. Industrial technologies C. Scientific technologies D. Agricultural technologies

9. Compare and contrast different types of trade barriers
SS7E6b
Compare and contrast different types of trade barriers

10. Trade Barriers Tariff Quota Embargo
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

11. Tariff A tax placed on goods from another country
Makes the imported item more expensive than a similar local product - “protective tarriff”

12. Quota 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

13. Embargo
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)

14. Q & A
What is a tariff?
A tax paid by the purchaser when goods are sold
A tax placed on goods coming into one country from another
A tax placed on goods made by local craftsmen or manufacturers
A tax paid when goods are shipped from one state to another in the United States

15. Q & A
2. What is a quota?
A decision to prevent certain goods from being imported
A tax placed on imported goods when they enter the country
A tax placed on goods when they are purchased in the market place
A limit to the number or amount of a foreign-produced good that is allowed into a country

16. Q & A
What is an embargo?
A tax placed on goods coming into the country from overseas
A limit to the amount of a certain good allowed into the country
A tax paid by the producer before he can sell his goods in another country
A formal halt to trade with a particular country for economic or political reasons

17. SS7E6c
Explain the primary function of the Organization of Petroleum Exporting countries (OPEC).

18. 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

19. Q & A Why was OPEC created? To regulate the supply and price of oil
B. To design new machinery to get oil out of the ground
C. To help the Palestinians in their problems with Israel
D. To keep countries that are not members from producing any oil

20. Q & A
2. What happens to the price of oil when OPEC countries decides to limit production?
Prices rise
Prices drop
Prices stay the same
Oil stops being sold

21. Q & A 3.Where are most of the OPEC countries located? Africa
South America
North America
Southwest Asia