absolute advantage
the ability of one party to produce a good or service at a lower cost than any competitor
comparative advantage
the ability of one party to produce a good or service at a lower opportunity cost than any competitor
efficient
completed in the fastest amount of time using the fewest number of resources
opportunity
a favorable occasion to complete or participate in something
specialization
the act of limiting the kinds of goods and services produced
Which best describes how producers benefit from specialization?
Producers can increase their profits.
Which calculation helps determine which producer has the absolute advantage?
Amount produced minus resources used.
Which company has the comparative advantage in producing large tubes of toothpaste?
Sparkling
Use the numbers to place the companies in order of greatest comparative advantage to least comparative advantage in producing small tubes of toothpaste.
1,2,3,4??
All else being equal, which bakery has the absolute advantage?
Mrs. Track’s??
A producer with a comparative advantage has the ability to produce a good or service at….
….a lower opportunity cost than any competitor can.
The term __________, often used in conjunction with absolute advantage, is defined as making the best use of resources.
efficiency
Which best describes how consumers may benefit from specialization?
Consumers have more price options.
Which company has the comparative advantage in producing small tubes of toothpaste?
Mmmint
Which best describes specialization?
developing expertise in certain types of production
______________ is the act of limiting the types of goods and services produced.
Specialization
Which best explains why producers choose to specialize?
-to increase sales
-to maintain market share
-to increase efficiency
Which manufacturer has the absolute advantage?
The Dairy
Which scenario is the best example of an opportunity cost?
A computer company produces fewer laptops to meet tablet demand.
Which describes a way in which consumers most likely benefit from producers’ absolute advantage?
Prices decrease as a result of increased production efficiencies.
What can a producer gain by specializing?
absolute advantage
x

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