6. INTERNATIONAL ECONOMIC ISSUES

Question 1

Absolute advantage

Answer 1

Ability to produce more of a
product than another country, with the same amount of resources

Question 2

Comparative advantage

Answer 2

Ability to produce a product
at a lower opportunity cost than another country (in comparison)

Question 3

International trade

Answer 3

Makes it possible for all countries
to benefit from other countries’ comparative advantages

Even when one of the countries is more efficient
at producing all products