Online Econ Chapter 2

Is it possible for a country to have a comparative advantage in producing a good without also having an absolute​ advantage? A country without an absolute advantage in producing a good

A country will not have a comparative advantage producing a good if its opportunity cost of producing that good is higher than that for other​ countries, even if it is producing efficiently.

Comparative Advantage

The ability of an individual, firm or country to produce a good or service at a lower opportunity cost than competitors.

Absolute Advantage

The ability of an individual, firm or country to produce more of a good or service than competitors, given the same amount of resources over time.

What happens if a country produces a combination of goods that efficiently uses all of the resources available in the​ economy?

The country is operating on it's production possibilities frontier

Production Possibilities Frontier

The production possibilities frontier ​(PPF ​) is a curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology.

Trade

the act of buying and selling, can benefit both parties