Section 1

Question 0

Economic independence

Answer 0

Is a situation in which producers in one nation depend on others to provide goods and services they do not produce.

Question 1

Specialization

Answer 1

Is a situation that occurs when individuals or businesses produce a narrow range of products.

Question 2

Absolute advantage

Answer 2

Is the ability of one trading nation to make a product more efficiently than another trading nation.

Question 3

Comparative advantage

Answer 3

Is a trading nation’s ability to produce something at a lower opportunity cost than that of another trading nation.

Question 4

Law of comparative advantage

Answer 4

States that countries gain when they produce items they are most efficient at producing and are at the lowest opportunity cost.

Question 5

Exports

Answer 5

Are goods and services produced in one country and sold to other countries.

Question 6

Imports

Answer 6

Are goods and services produced in one country and purchased by another.