Chapter 3: Interdependence And The Gains From Trade Flashcards
1
Q
Absolute advantage
A
The comparison among producers of a good according to their productivity
2
Q
Comparative advantage
A
The comparison among producers of a good according to their opportunity cost
3
Q
Imports
A
Goods brought in
4
Q
Exports
A
Goods brought out
5
Q
Autarky
A
Country that doesn’t trade
6
Q
Just know how to calculate absolute advantage and comparative advantage
A
Absolute = the person who can make the most!
Comparative = the lowest number after division!
7
Q
During trade, _______________
A
Everyone benefits!
8
Q
Can one person have a comparative advantage in both items?
Can a person have an absolute advantage in both?
A
No!
Yes!
