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Chapter 2 Trade and Comparative Advantage

Author: Matthew Lonn

Trade and Comparative Advantage

Comparative and Absolute Advantage

Use this tutorial to help you gain a better understanding of trade and comparative advantage. Use slides 15-20 on the power point notes.

Questions you should be able to answer after the lesson

1. Define comparative advantage.

2. Define absolute advantage.

3. Explain how it can be beneficial for nations to specialize and trade.

4. Measure the cost of one good in terms of opportunity cost.

Chapter 2 Notes

Comparative Advantage and Trade