Specialization: -Individuals and countries can be made better off if they will produce in what they have a comparative advantage and then trade with others for whatever else they want or need
Absolute and Comparative Advantage:
Absolute: -The producer that can produce the most output or requires the least amount of inputs Comparative: -The producer with the lowest opportunity cost - Countries should trade if they have a relatively lower opportunity cost - They should specialize in the good that is cheaper for them to produce
Distinguishing Input from Output: - An output problem presents the data as products produced given a set of resources. - An input problem presents the data as amount od resources needed to produce a fixed amount of output. -When identifying absolute advantage, input problems change the scenario from who can produce the most to who can produce a given product in a least amount of time and resources.
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