5.04: Why Do Countries Trade?

SpecializationFocusing on specific products for production in higher quantities
AdvantageWho can more efficiently use scarce resources, meaning the factors of production such as capital, labor, land, etc.
Absolute AdvantageWhen an individual, company, or country requires less physical resources than another to produce a particular good or service
Comparative AdvantageWhen a country has a lower opportunity cost than another country to produce a particular good or service