Lesson summary: Comparative advantage and gains from trade

Comparative advantage

________ and opportunity costs determine the** terms of trade** for exchange under which mutually beneficial trade can occur.

Absolute advantage

________** describes a situation in which an individual, business or country can produce more of a good or service than any other producer with the same quantity of resources.

Self sufficiency

________ "is not necessarily a trait to be strived for in the global economy.

Comparative advantage

________** describes a situation in which an individual, business or country can produce a good or service at a lower opportunity cost than another producer.