Comparative advantage, trade Flashcards
1
Q
Gains from trade
A
the benefits that come from reallocating resources, goods, and services to better uses.
2
Q
Absolute advantage
A
the ability to do a task using fewer inputs.
3
Q
Comparative advantage
A
the ability to do a task at a lower opportunity cost.
4
Q
Opportunity cost
A
the opportunity cost of doing a task is the output you produce in your next best alternative task.
5
Q
Specialization
A
focusing on specific tasks, spending more of the time on what a person is relatively good at, and less of the their time doing other stuff.
6
Q
four things about comparative advantage
A
-explains why there are gains from trade in markets.
- explains why people specialize.
-drives international trade.
-is about reallocating resources to their better use.
7
Q
A
