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8 Cards in this Set
- Front
- Back
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Absolute advantage |
The ability to produce a good using fewer inputs than another producer |
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Opportunity cost |
Whatever is given up in order to obtain some item |
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Comparative advantage |
The ability to produce a good at a lower opportunity cost than another producer |
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Gains from trade |
The increase in total production due to specialization allowed by trade |
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True or false: if Japan has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item |
False |
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True or false: comparative advantage, not absolute advantage, determines the decision to specialize in production |
False |
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True or false: absolute advantage is a comparison among producers based on productivity |
True |
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True or false: comparative advantage is a comparison among producers based on opportunity cost |
True |
