International Trade & Globalization

What is international trade?

The exchange of goods and services across national borders

What is an import?

A good or service brought into a country from abroad

What is an export?

A good or service sold from one country to another

What is comparative advantage?

The ability of a country to produce a good or service at a lower opportunity cost than another country, making trade mutually beneficial

How does comparative advantage differ from absolute advantage?

Absolute advantage means producing more output with the same resources; comparative advantage means producing at a lower opportunity cost — a country can benefit from trade even without an absolute advantage