Absoloute And Comparative Advantage Flashcards
1
Q
What is absolute advantage
A
Producing a good/service more efficiently (that is more with the same amount of resources ) than another country
2
Q
What is comparative advantage
A
Opportunity cost. Its based on which country is giving up the least when they decide to produce each unit of a good or service
3
Q
What is meant by a closed economy without specialisation?
A
Producing everything the people / economy need without trade
4
Q
WHAT IS MEANT BY SPECIALISATION?
A
When a country chooses to focus on goods they have a comparative advantage over.
