12 Economics Textbook - Notes / Questions

Select the correct term from the list below that describes each statement.

A Comparative advantage

B Absolute advantage

C Competitive advantage (of a nation)

D Imports 

E External stability

F Specialisation

G Intra-company trade

H Open economy

I Factor endowment

J Human capital

1 Trade between affiliates of the one organisation; for example, between a home-based

subsidiary and a foreign-based subsidiary of the same company

2 The ability of a nation to produce commodities more efficiently than another nation

3 The knowledge, experience and skills of individuals, in which nations must invest if they are

to advance

4 Goods that enter Australia from overseas

5 The supply of the factors of production (land, labour, capital and enterprise) that exists in a

country

6 The specific use of resources in narrowly defined economic activities

7 The ability of a nation to produce a product at a lower opportunity cost of production than

another nation

8 The situation in which there are no unwanted movements of foreign reserves in the balance

of payments

9 Trade advantage obtained through the capacity of a nation’s industries to innovate

and upgrade

10 Any nation that trades with other nations. 

1 = G - Intra-company Trade

2 = B - Absolute Advantage

3 = J - Human Capital

• Human capital is the economic value of a person’s knowledge, skills, abilities, and experience. 

4 = D - Imports

5 = I - Factor Endowment

6 = F - Specialisation 

7 = A - Comparative Advantage

8 = E - External Stability

9 = C - Competitive Advantage

10 = H - Open Economy