Module 4: Comparitive Advantage & Trade Flashcards

1
Q

Trade

A

They provide goods and services to others and receive goods and services in return

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2
Q

Gains from trade

A

People can get more of what they want through trade than they could if they tried to be self-sufficient

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3
Q

Specialization

A

Each person specializes in the task that he or she is good at performing

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4
Q

Comparative advantage

A

An individual has a comparative advantage in producing a good or service if the opportunity cost of producing a good or service is lower for that individual than for other people

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5
Q

Absolute advantage

A

An individual has absolute advantage in producing a good or service if her or she can make more of it

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