Question

Match each scenario with a concept related to regulation of international trade. a trade organization that dominates trade by keeping prices high and limiting competition reduction or elimination of tariffs and quotas a ban on trading with a particular country cartel embargo and free trade

Answer 1

Cartel: a trade organization that dominates trade by

keeping prices high and limiting competition

Embargo: a ban on trading with a particular country

Free Trade: Reduction or elimination of tariffs and quotas

Answer 2

The correct definitions of each international trade regulation are the following:

• A cartel is a trade organization that dominates trade by keeping prices high and limiting competition. It is a form of formally collusive oligopoly. When a market is constituted by a reduced number of suppliers, these reach agreements instead of competing.
• Free market is the reduction or elimination of tariffs and quotas. It consists on the elimination of trade barriers between two countries, so that national producers compete in equal conditions with foreign ones in the domestic markets.
• An embargo is a ban on trading with a particular country. It is a measure adopted in order to impose a sanction on a certain country. For example, the US did on Cuba in 1960, after the Cuban Revolution.