Studied by 2 people
Why do people trade?
When everyone specializes in the production of goods and services and trades with others, we have more access to more choices and a higher standard of living
Per unit of opportunity cost=
opportunity cost/units gained
when calculating opportunity cost we ______ what we _____ ______
give; get down
absolute advantage
the producer that can produce the most output or requires the lease amount of input/resources
comparative advantage
the producer with the lowest opportunity cost
which good should a country specialize in?
the one that is cheaper from them to produce in which they have a lower opportunity cost/comparative advantage.
Output question
the amount of input are the same but the output of each are different
OOO
output, other goes, over
Input question
the amount of output is the same but the input is different
IOU
input, other goes, under
Terms of Trade
the agreed upon conditions that benefit both countries
