Chapter 2: The Power of Trade and Comparative Advantage
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8 Terms
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_____ makes people with different preferences better off.
Trade
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______________ increases productivity.
Specialization
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_________ increases productivity so specialization increases total output.
Knowledge
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Without _____, ______________ is impossible.
Trade, Specalization
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Producing the same good at a lower cost than another country
Absolute Advantage
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Shows all the combinations of products that a country can produce given its productivity and supply of inputs.
Production Possibilities Frontier
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The ability to produce a good or service at a lower opportunity cost than another producer.
Comparative Advantage
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Consumption Equation
Product x Sell Price + Other Product x Sell Price (/Amt. of Workers).