Chapter 3 - Interdependence and the Gains From Trade

Question 0

Opportunity Cost

Answer 0

Opportunity cost is whatever must be given up to obtain some item.

Question 1

Absolute Advantage

Answer 1

Absolute advantage is the ability to produce a good using fewer inputs than another producer.

Question 2

Comparative Advantage

Answer 2

Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer.

Question 3

Imports

Answer 3

Imports are goods produced abroad and sold domestically.

Question 4

Exports

Answer 4

Exports are goods produced domestically and sold abroad.