Trade in a Market Economy

Front

Comparative Advantage Concept

Back

The ability to produce a good at a lower opportunity cost than another.

Front

Impact of No Trade on Alex and Kirk

Back

Limits their consumption to what they can produce individually.

Front

Kirk has a comparative advantage in coconuts.

Back

Front

Alex should specialize in fish because his opportunity cost is lower.

Back

Front

Absolute advantage vs. comparative advantage.

Back

Absolute advantage means being better at producing everything, but comparative advantage focuses on being better at producing specific goods.

Front

Gains from trade.

Back

Trade allows for gains by utilizing comparative advantage.

Front

Trade and comparative advantage.

Back

Trade is beneficial because it allows countries to specialize based on their comparative advantages.

Front

Benefits of trade.

Back

Trade allows countries to obtain goods they do not produce efficiently.

Front

U.S. production with trade is shown on the curve.

Back

U.S. production with trade.

Front

Canadian consumption with trade is shown on the curve.

Back

Canadian consumption with trade.