What is comparative advantage, absolute advantage, terms of trade, consumption possibilities curve?
Comparative advantage-The ability of one person or nation to produce a good at a lower opportunity cost than another person or nation. Absolute advantage-The ability of one person or nation to produce a product at a lower resource cost than another person or nation. Terms of trade-The rate at which units of one product can be exchanged for units of another product Consumption possibilities curve-A curve showing the combinations of two goods that can be consumed when a nation specializes in a particular good and trades with another nation.
“comparative advantage The ability of one person or nation to produce a good at a lower opportunity cost than another person or nation.” “absolute advantage The ability of one person or nation to produce a product at a lower resource cost than another person or nation.” “terms of trade The rate at which units of one product can be exchanged for units of another product.” “consumption possibilities curve A curve showing the combinations of two goods that can be consumed when a nation specializes in a particular good and trades with another nation.” Source and further information: http://wps.prenhall.com/bp_osullivan_micro_5/60/15391/3940175.cw/index.html
