Chapter 3 - Interdependence and the Gains from Trade

International trade

________ brings more peace and prosperity to all countries.

Multiple people

________ can benefit from trade consecutively, as trading allows each person to specialize in doing what they do /know best.

producer

A(n) ________ is at an absolute advantage when a smaller quantity of inputs produce a good.

Imports

________: goods produced abroad and sold domestically.

Exports

________: goods produced domestically and sold abroad.

Comparative advantage

________ allows for independence and gains when it comes to trade.

Adam Smith

________ wrote in his 1776 novel, The Wealth of Nations, analyzing the role of trade and economic independence.

Absolute advantage

________: the ability to produce a good using fewer inputs than another producer.

Opportunity cost

________: whatever must be given up to obtain some item.

David Ricardo

________, a millionaire stockbroker, was inspired by Adam Smith.

Comparative advantages

________ give rise to specialization and trade.

Comparative advantage

________: the ability to produce a good at a lower opportunity cost than another producer.

opportunity cost

A trade- off between the two goods that each producer faces is measured by the ________.

comparative advantage

When someone is able to specialize in producing goods, they 're at a(n) ________.