Vocabualry
Absolute Advantage
When a nation, business, or individual can produce a good or service more efficiently than another entity.
Comparative Advantage
When a nation has a lower opportunity cost than another nation.
Terms of Trade
The price of a good or service that must be given up to obtain another good or service.
Specialization
When a person or country uses the available resources to make a certain good with the idea of trading that good for other goods or services.
Opportunity Cost
The value of what is given up when one activity is chosen over another.