chapter 3 Flashcards
1
Q
what is interdependence
A
two countries engage in trade, both rely on one another for a resource or service
2
Q
what is trade
A
voluntary exchange between two or more people which makes all participants better off
3
Q
what is absolute advantage
A
ability to produce a good using fewer inputs than another producer
4
Q
what is comparative advantage
A
ability to produce a good at a lower opportunity cost than another producer (requires output data)
5
Q
what is specialization
A
country with lower opportunity cost (comparative advantage) will specialize in the production of it, encourages trade
6
Q
what is self-sufficient
A
does not engage in trade
