Chapter 3 - Interdependence and the Gains From Trade

Vocabulary
Absolute Advantage


 * Definition: The ability to produce a good using fewer inputs than another producer.


 * What It Means:

Opportunity Cost


 * Definition: Whatever must be given up to obtain some item.


 * What It Means:

Comparative Advantage


 * Definition: The ability to produce a good at a lower opportunity cost than another producer.


 * What It Means:

Imports


 * Definition: Goods produced abroad and sold domestically.


 * What It Means:

Exports


 * Definition: Goods produced domestically and sold abroad.


 * What It Means: