What is it called when a country can produce a good more efficiently than another country?
absolute advantage, economic concept that is used to refer to a party's superior production capability. Specifically, it refers to the ability to produce a certain good or service at lower cost (i.e., more efficiently) than another party.
What kind of advantage does a country have if it can make a product more efficiently?
What kind of advantage does a country have if it can make a product more efficiently? an absolute advantage.
What is it called when one country makes a product with a lower opportunity cost than another country?
Comparative advantage describes a situation in which an individual, business or country can produce a good or service at a lower opportunity cost than another producer.
What is comparative and absolute advantage?
Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor. Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.
What is absolute cost?
the minimum costs that an organisation must bear to remain in business.
What does the term comparative advantage mean?
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else. Having a comparative advantage is not the same as being the best at something.
What kind of advantage does a country have if you can make a product more efficiently quizlet?
Absolute advantage means a country has a monopoly on a certain product or can produce the product more efficiently than any other country.
What is absolute advantage example?
A clear example of a nation with an absolute advantage is Saudi Arabia, The ease with which it can reach its oil supplies, which greatly reduces the cost of extraction, is its absolute advantage over other nations.
When a country has the ability to produce a product more efficiently and at a lower opportunity cost than another country it is known as?
Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality. Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products.
What do you mean by trade deficit?
: a situation in which a country buys more from other countries than it sells to other countries : the amount of money by which a country's imports are greater than its exports. We have an annual trade deficit of $6.2 billion.
What is a comparative advantage in economics?
comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.
Why should countries specialize in producing goods with which they have a comparative advantage rather than an absolute advantage?
Comparative Advantage More specifically, countries should import goods if the opportunity cost of importing is lower than the cost of producing them locally. Specialization according to comparative advantage results in a more efficient allocation of world resources.
What is meant by free trade?
Free trade occurs when goods and services can be bought and sold between countries or sub-national regions without tariffs, quotas or other restrictions being applied.
What is the meaning of comparative advantage in economics?
comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.
Which country has comparative advantage?
For example, countries with plentiful oil resources can generally produce oil inexpensively. Because Saudi Arabia produces oil very cheaply, it holds a comparative advantage in oil, and it exports oil in order to finance its purchases of imports.
What is the result when a country can produce goods more efficiently or better than other nations quizlet?
Absolute advantage is a country's ability to produce a given product more efficiently than can another country; comparative advantage is a country's ability to produce a given product relatively more efficiently than can another country.
When a country trades products it produces most efficiently and effectively to other countries and buys those it Cannot produce as efficiently or effectively?
What is theory of comparative advantage? The theory of comparative advantage contends that a country should make and then sell those products its produces most efficiently but buy those it cannot produce as efficiently.
How does a country have absolute advantage?
A country has an absolute advantage in producing a good over another country if it uses fewer resources to produce that good. Absolute advantage can be the result of a country's natural endowment.
What is meant by absolute cost advantage?
In economics, the principle of absolute cost advantage refers to the ability of a business to produce more, sell more of a good or service than competitors, using the same amount of resources.
What does it mean when a country has a trade deficit with another country?
A trade deficit occurs when a country's imports exceed its exports during a given time period. It is also referred to as a negative balance of trade (BOT).
What causes trade deficit?
A trade deficit occurs when a country imports more than it exports. Also known as a negative balance of trade, a country with a trade deficit has spent more money than it has made in international trade with the rest of the world.
What should a country do if it has a comparative advantage in a product quizlet?
In order to maximize trade according to the principles of comparative advantage, country Y should produce food and import clothes from country X. nations produce a surplus at a lower cost and export it for goods that are too costly to produce.
Why should countries specialize in producing goods with which they have a comparative advantage rather than an absolute advantage quizlet?
Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers. Countries are better off if they specialize in producing the goods for which they have a comparative advantage.
What kind of advantage does a country have if it can make a product more efficiently quizlet?
Absolute advantage means a country has a monopoly on a certain product or can produce the product more efficiently than any other country. There are few examples of absolute advantage in the global market today.
What is a free trade country?
A free trade area is a group of countries that have few or no barriers to trade in the form of tariffs or quotas between each other. Free trade areas tend to increase the volume of international trade among member countries and allow them to increase their specialization in their respective comparative advantages.
What is another word for free trade?
In this page you can discover 19 synonyms, antonyms, idiomatic expressions, and related words for free-trade, like: economic community, capitalism, common market, fair-trade, multilateral trade, noninvolvement, open market, reciprocal trade, free from, protectionism and free-market.
How does a country use the idea of comparative advantage to decide when to trade?
A country has a comparative advantage when a good can be produced at a lower cost in terms of other goods. Countries that specialize based on comparative advantage gain from trade.
Why do countries have comparative advantage?
In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.
When one country can produce a product more cheaply and efficiently than any other country it has an <UNK> advantage?
Comparative advantage Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality. Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products.
What does comparative advantage mean in economics?
comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.