Econ Chapter 3

an overall increase in output obtained through specialization and exchange.

A nation's true gain from international trade is:

its domestic opportunity cost is least.

According to the concept of comparative advantage, a good should be produced in that nation where:

when the economy is self-sufficient.

An economy's production possibilities frontier is also its consumption possibilities frontier

grown both absolutely and as a percentage of GDP.

Since 1970, United States exports and imports have:

consume more goods than we otherwise would be able to consume.

The most obvious benefit of specialization and trade is that they allow us to

trade flow.

The physical import of DVD players to the United States from Japan best illustrates a:

How are the gains from trade shared among the parties to a trade?

The principle of comparative advantage does not provide answers to certain questions. One of those questions is

financial flow.

The spending by Americans while traveling in Europe best illustrates a:

ratio at which nations will exchange two goods.

The terms of trade reflect the:

each person spends more time producing that product in which he or she has a comparative advantage.

Total output in an economy increases when each person specializes because

Comparative advantage.

Which of the following concepts provides the basic rationale for international trade?