Comparative Advantage and International Trade

These flashcards focus on important vocabulary terms related to comparative advantage and international trade as discussed in the lecture notes.

Tariff

A tax imposed by a government on imports.

Imports

Goods and services bought domestically but produced in other countries.

Exports

Goods and services produced domestically but sold in other countries.

Comparative Advantage

The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Opportunity Cost

The highest-valued alternative that must be given up to engage in an activity.

Absolute Advantage

The ability to produce more of a good or service than competitors when using the same amount of resources.

Autarky

A situation in which a country does not trade with other countries.

Terms of Trade

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

Protectionism

The use of trade barriers to shield domestic firms from foreign competition.

Dumping

Selling a product for a price below its cost of production.