Podcast
Questions and Answers
What is absolute advantage?
What is absolute advantage?
- The ability to produce a good or service at a lower opportunity cost than another country
- Requiring or relying on something
- The ability to produce a good or service more efficiently than another country can produce the same good or service (correct)
- The act of limiting the kinds of goods and services produced
What is comparative advantage?
What is comparative advantage?
- The ability to produce a good or service at a lower opportunity cost than another country (correct)
- Requiring or relying on something
- The ability to produce a good or service more efficiently than another country
- The act of limiting the kinds of goods and services produced
What does it mean to be dependent?
What does it mean to be dependent?
Requiring or relying on something
What is specialization?
What is specialization?
A country with an absolute advantage can produce a good or service more efficiently than another country.
A country with an absolute advantage can produce a good or service more efficiently than another country.
Which internationally traded product is the Middle East best associated with?
Which internationally traded product is the Middle East best associated with?
Which region specializes in diamonds?
Which region specializes in diamonds?
Provide an example of a country that is dependent on other countries.
Provide an example of a country that is dependent on other countries.
What is it called when a company in Maine sends lobsters to France?
What is it called when a company in Maine sends lobsters to France?
What does it mean when the United States is said to have an absolute advantage in producing food compared with Japan?
What does it mean when the United States is said to have an absolute advantage in producing food compared with Japan?
Why would a country want to establish absolute advantage?
Why would a country want to establish absolute advantage?
What is the best example of opportunity cost?
What is the best example of opportunity cost?
Why does the US import oil?
Why does the US import oil?
Give an example of a country that is overly dependent on another country for critical goods and services.
Give an example of a country that is overly dependent on another country for critical goods and services.
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Study Notes
International Trade Concepts
- Absolute Advantage: Ability to produce goods or services more efficiently than another country.
- Comparative Advantage: Ability to produce goods or services at a lower opportunity cost compared to another country.
Trade Dependencies
- Dependent: Relying on external resources or goods for economic stability.
- Example of dependency: A country with little fertile soil relies heavily on imports for food.
Specialization and Production
- Specialization: Focusing on producing limited types of goods or services to enhance efficiency.
- A country with absolute advantage can produce goods more efficiently, enhancing its export potential.
Key International Trade Products
- Middle East: Primarily associated with oil production and trade.
- Sub-Saharan Africa: Known for specializing in diamonds.
Import and Export Dynamics
- Exporting: Sending products abroad; Maine lobsters sent to France as an example.
- The U.S. imports oil due to insufficient domestic production capacity.
Opportunity Cost in Trade
- Opportunity Cost: The cost of forgoing the next best alternative; choosing to export bananas instead of wheat illustrates this concept.
- A country overly dependent on imports, like one that imports all its oil, highlights risks in trade relationships.
Efficiency and Economic Strategy
- Countries strive for absolute advantage to maximize production efficiency and competitiveness in global markets.
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