Microeconomics Ch. 8

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Comparative Advantage

can produce a good with a lower opportunity costs – basis of al trade. (can’t have in both products)
Absolute Advantage

can produce more with the same amount of resources. (can have in both products)
External Economies

reductions in a firm’s costs that result from an expansion in the size of an industry.
Quantity Imported

Qd-Qs
Protectionism

the use of trade barriers to shield domestic companies from foreign competition. (saving jobs, protecting high wages, national security)
Quota

limit imposed by gov’t on the quantity of a good that can be imported into a country.
Globalization

when countries become more open to foreign trade and investment.
Terms of Trade

the ratio at which a country can trade its exports for imports from other countries.