Absolute Advantage
the ability to produce a good using fewer inputs than another producer
What is Trade?
Specialization should be based on which kind of advantage?
Comparative advantage
What does the principle of comparative advantage explain?
What is interdependence and gains from trade?
"item that we give up to get that item"(Mankiw, 2019, p. 51)
What is opportunity cost?
Goods produce domestically and sold abroad
What is exports?
The ability to produce a good using fewer inputs than another produce
What is absolute advantage?
Specialization occurs where opportunity cost is lowest
True
If the opportunity cost of one good is high, the opportunity cost of the other must be
..Low
Good produced abroad and sold domestically
What is imports?
TRUE OR FALSE
The person who can produce the good with the smaller quantity of inputs is said to have an absolute advantage in producing the good
True
What kind of advantage could an increase in technology result in?
What is comparative advantage?
Which of the two advantages, comparative or absolute, corresponds with opportunity cost?
What is comparative advantage?
"Can make everyone better off"...
What is trade?
The factors that determine what goods a country has a comparative advantage in?
What is abundance, productivity, cost of labor, land, and capital?
Shows the various mixes of output that an economy can produce
What is the production possibilities frontier?
Benefits of specialization and trade?
Increase output and higher standard of living