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3 cards from this section. Quick, good the night before a test.
What does absolute advantage mean?
Think about which country can simply create more of one product.
Define comparative advantage.
Focus on the costs associated with production.
What does absolute advantage refer to?
Think about efficiency in production.
True or False: A country can have both an absolute and a comparative advantage.
Consider the definitions of both types of advantages.
Consider two countries, X and Y. Country X can produce 100 units of product A and 50 units of product B. Country Y can produce 70 units of product A and 30 units of product B. Discuss which country has absolute and comparative advantages?
Use ratios to derive opportunity costs.
If Country A has an absolute advantage in both computers and textiles but still trades, analyze the economic rationale for it continuing such practice.
Reflect on specialization vs. overall efficiency.
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