Chapter 33 Terms 102 - Comparative Advantage and World...

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Comparative Advantage and World Trade : An efficiency that occurs when nations (or individuals) specialize based on their comparative advantages are demonstrated and stressed. How two countries can increase total world output by specializing and then trading. The Output Gains from Specialization: If specialization and trade occurs along lines of comparative advantage, then production increases above what would be otherwise possible. Comparative Advantage: Comparative advantage is the ability to produce a good or service at a lower opportunity cost than can other producers. Specialization in Production: Each country completely specializes in the product in which it has comparative advantage. Specialization Is the Key: Trade along lines of comparative advantage allows increases in production and consumption. Specialization along lines of comparative advantage allows nations to produce more efficiently and worldwide production capabilities to increase. The Relationship Between Imports and Exports:
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This note was uploaded on 06/06/2011 for the course ECON 102 taught by Professor Dsilvia during the Fall '11 term at Moraine Valley Community College.

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Chapter 33 Terms 102 - Comparative Advantage and World...

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