4.2 International Trade

Question 1

What is the theory of comparative advantage?

Answer 1

States that specialization and trade between countries benefit all who are involved.

Question 2

Define comparative advantage

Answer 2

Means that a country can produce a good or service relatively more efficiently compared to other consumers.

Question 3

What is an absolute advantage?

Answer 3

Is the ability to produce more of a good or a service than any other country.

Question 4

What is a competitive advantage?

Answer 4

A company’s ability to gain access to use resource to give them and edge over their competition.

Question 5

What is (BOP) Balance of Payments

Answer 5

BOP is a system that shows the difference in total value between the payments into and out of a country over a period of time.