The principle of comparative advantage applies to countries as well as to individuals.

Economists use the principle of comparative advantage to emphasize the potential benefits of free trade.

A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good.

Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.

Each country's production possibilities frontier would shift inward.

The size of the economic pie would increase.

The well-being of citizens in each country would be enhanced.

Worldwide production of goods and services would increase.

limits a country's ability to produce goods and services on its own.

can best be understood by examining the countries' absolute advantages.

allows each country to consume at a point outside its production possibilities frontier.

must benefit both countries equally; otherwise, trade is not mutually beneficial.

locational and logistical circumstances.

payments to land, labor, and capital.

input requirements per unit of output.

opportunity costs.

evident in the real world, but impossible to capture in economic models.

based on the principle of absolute advantage.

a result of more efficient resource allocation than would be observed in the absence of trade.

evident in economic models, but seldom observed in the real world.

gains to some traders that exactly offset losses to other traders.

absolute advantage.

comparative advantage.

shrinkage of the economic pie.

the country should produce just enough of that good for its own consumption.

None of the above is correct.

the country should import that good.

the country's opportunity cost of that good is high relative to other countries' opportunity costs of that same good.