ECO102H1 Chapter Notes - Chapter 26: Absolute Advantage, Factor Endowment, Comparative Advantage
45
ECO102H1 Full Course Notes
Verified Note
45 documents
Document Summary
Open economy: an economy that engages in international trade. Closed economy: an economy that has no foreign trade. Trade among individual allows people to specialize in activities they can do well and to buy from others the goods and services they cannot easily produce. With trade, everyone must be self-sufficient; with trade, people can specialize in what they do well and satisfy other needs by trading. With trade, each individuals, region, or country is able to concentrate on pruding good and services that it produces efficiently while trading to obtain goods and services that it does not produce efficiently. Gains from trade: this basic principle is true for individuals, regions, and countries: The gains from trade: the increased output attributes to the specialization according to comparative advantages that is made possible by trade. Absolute advantages: the situation that exists when one country can produce some commodity at lower absolute cost than another country.
