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Unformatted text preview: 2. Exports: goods produced domestically and sold abroad. To export means to sell domestically produces goods abroad 3. Imports: goods produced abroad and sold domestically. To import means to purchase goods produced in other countries 4. Consumption with and without trade E. Absolute advantage: the ability to produce a good using fewer inputs than another producer 1. The U.S. has an absolute advantage in wheat: producing a ton of wheat uses 10 labor hours in the U.S. vs. 25 in Japan 2. If each country has an absolute advantage in one goods and specializes in that good, then both countries can gain from trade 3. Comparative advantage: he ability to produce a good at a lower opportunity cost that another producer 4. Gains come from F. Interdependence I. Class Notes Monday, January 31, 2011 12:31 PM Microeconomics Page 1...
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This note was uploaded on 05/05/2011 for the course ECON 102 taught by Professor Yotsubo during the Spring '08 term at Rutgers.
- Spring '08