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
"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?
True/False
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
Benefits of specialization and trade
Increase output and higher standard of living
What kind of advantage could an increase in technology result in?
What is comparative advantage?
Can make everyone better off
What is trade?
Shows the various mixes of output that an economy can produce
What is the production possibilities frontier?