AICET for CITS flashcards

31 cards. Read the term and the definition here. The deck at the top of this page is optional.

Comparative advantage

The ability to produce a good at lower opportunity cost than a trading partner. It explains why specialisation and exchange raise total output even when one country is absolutely better at everything.

Opportunity cost ratio

Units of one good sacrificed to release resources for one more unit of another. Comparing these ratios between two countries identifies who should specialise in each good.

Terms of trade

The ratio at which exports exchange for imports. For mutual gain it must fall between the two countries' domestic opportunity-cost ratios, and it shifts with relative demand and supply.

Deadweight loss of a tariff

The welfare lost because the tariff suppresses low-cost imports and encourages high-cost domestic output. It equals the production distortion plus consumption distortion triangles.

Effective rate of protection

Protection on value added rather than on the finished good's price. It exceeds the nominal tariff when imported inputs enter duty-free, and can be negative if inputs are taxed heavily.

Marshall–Lerner condition

A devaluation improves the trade balance only if the sum of export and import demand elasticities exceeds one. Otherwise the balance worsens before it improves.

Balance of trade

Exports of goods minus imports of goods over a period. The current account widens this to include services, primary income and unilateral transfers.

Infant industry argument

Temporary protection for a new domestic industry until it achieves scale and learning economies. It is valid only if the cost is later recouped and protection is time-limited.

FOB versus CIF

Under FOB the seller delivers goods on board and risk passes there. Under CIF the seller also pays freight and insurance to the named destination port, but risk still passes on shipment.

EXW obligation

The seller merely makes goods available at its own premises. The buyer bears loading, carriage, export clearance and all risk from that point, making it the minimum seller obligation.

DDP obligation

The seller delivers to the named destination, cleared for import and with all duties paid. It is the maximum seller obligation and requires the seller to handle import formalities.

Documentary credit

A bank's irrevocable undertaking to pay against compliant documents. Banks examine documents only, so any discrepancy between the credit terms and the presented papers permits refusal.

Bill of lading

A carrier's receipt, evidence of the contract of carriage, and a document of title. As a title document it can be endorsed to transfer ownership of the goods in transit.

Sight draft versus usance

A sight draft is payable immediately on presentation. A usance draft allows payment after a stated period, and acceptance by the drawee creates a trade acceptance.

Chargeable weight

The greater of actual gross weight and volumetric weight. Volumetric weight is derived from length times width times height divided by the carrier's stated divisor.

Certificate of origin

A document certifying where goods were produced. It determines eligibility for preferential tariff rates and is checked against the origin rules of the relevant trade agreement.

Tolerance

The permitted difference between upper and lower limits of a dimension. Tolerance equals upper limit minus lower limit and is always a positive magnitude.

Allowance

The intentional difference between the mating sizes of hole and shaft. Minimum clearance equals hole lower limit minus shaft upper limit; a negative value indicates interference.

Cutting speed formula

V equals pi times diameter times rpm divided by one thousand, giving metres per minute. Rearranged, spindle speed equals one thousand times V divided by pi times diameter.

Machining time formula

Time equals total tool travel divided by feed per revolution times spindle speed. Total travel includes approach, the work length and overtravel of the tool.

Taper angle formula

Tangent of the taper half-angle equals big diameter minus small diameter, divided by twice the taper length. The compound slide is swivelled to this half-angle.

Tap drill size

Approximate tap drill diameter equals major diameter minus pitch for metric threads. The drilled hole must exceed the thread's minor diameter to avoid tap breakage.

Stress and strain

Stress is force divided by cross-sectional area, in newtons per square millimetre. Strain is change in length divided by original length and is dimensionless.

Gear train ratio

Ratio equals the product of driven teeth divided by the product of driver teeth. Output speed equals input speed multiplied by drivers divided by drivens.

First-angle projection

The object lies between observer and plane, so the top view appears below the front view and the left-side view is placed on the right of it.

Third-angle projection

The plane lies between observer and object, so the top view appears above the front view and the right-side view is placed on the right.

Line precedence rule

When lines coincide, visible outlines are drawn first, then hidden lines, then centre lines, and finally dimension and extension lines.

Representative fraction

The ratio of drawing length to actual length. It is written 1:n for a reduction and n:1 for an enlargement, and is stated in the title block.

Geometric tolerance symbols

Form covers straightness, flatness, circularity and cylindricity. Orientation covers parallelism, perpendicularity and angularity; location covers position, concentricity and symmetry; runout is separate.

Section hatching convention

Cut material is shown by thin continuous lines at 45 degrees. Adjacent components are hatched in opposite directions so their boundaries remain distinguishable.

Surface roughness Ra

Ra is the arithmetical mean deviation of the profile from its mean line. A smaller Ra value indicates a smoother surface and a finer finishing process.