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absolute advantage
ability to produce a good using fewer inputs than another producer
if each country has an abs advantage in one good & specializes in that good then both countries can gain from trade
comparitive advantage
ability to produce a good at a lower opp cost than another producer
when finding the opportunity cost
put item they ask for on the bottom
if the give you one items opp cost then the reciprical is the opp cost of the other item
any point on a countrys ppf represents
a combo of two goods that an eco can produce using all available resources and technology
unemployment would cause an eco to
produce inside its ppf
trade between countries
allows each country to consume at a point outside its ppf
Author:
jillmray
ID:
67969
Card Set:
ch 3
Updated:
2011-02-22 00:06:11
Tags:
economics
Folders:
Description:
gains from trade
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