Globalisation + Specialisation and Trade

Question 1

Globalisation

Answer 1

An increase in the economic interdependence of the countries of the world.

Question 2

Absolute advantage

Answer 2

when a country can produce more of a product than another country

Question 3

Comparative advantage

Answer 3

when a country can produce at a lower opportunity cost than another country

Question 4

Law of comparative advantage

Answer 4

even if a country has an absolute advantage in the production of all goods, it can still be benefit from specialisation and trade if it specialises in the production of goods which it has a comparative advantage.