Chapter 3: Interdependence & the gains from trade

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5 Terms

1
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Absolute Advantage

the ability to reduce a good using fewer inputs than another producer

2
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Opportunity Cost

Whatever must be given up to obtain some item

3
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Comparative Advantage

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

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Imports

Goods produced abroad and sold domestically

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Exports

Goods produced domestically and sold abroad