9b absolute comparative advantage

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9b absolute comparative advantage

  1. 1. EPF9 The student will demonstrate knowledge of the global economy
  2. 2. Absolute and ComparativeAdvantages in International Trading Countries seek to maximize the use of their limited resources
  3. 3. Absolute vs. ComparativeAbsolute Advantage An individual, business, or country that can produce a certain good with fewer resources than other countries is said to have an absolute advantage.Comparative Advantage An individual, business, or country that can produce a certain good at a lower opportunity cost than its trading partners is said to have a comparative advantage.
  4. 4. SpecializationWhen an individual, business, or country focuses its resources on producing a few goods or services and expects to trade for other goods and services it wants.
  5. 5. Affects of Comparative AdvantageTradingTotal world production is greater when nations specialize in the production of those products that they can produce most efficiently.
  6. 6. Primary Motivating Factor forInternational Trade Comparative advantage is the primary motivating factor driving international trade.

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