The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.

The gains from specialization and trade are based not on comparative advantage but on absolute advantage.

The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good.

The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X.

allows people to specialize according to comparative advantage.

reduces competition among domestic companies.

requires some workers in an economy to be retrained.

increases cooperation among nations.

natural advantage.

trading advantage.

absolute advantage.

comparative advantage.

the combinations of output that an economy should produce efficiently.

the combinations of output that an economy should consume efficiently.

the combinations of output that an economy can produce efficiently.

All of the above are correct.

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.