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Knowledge Base

Trade: Competition or cooperation? | Chapter 11

Terms You May Have Heard:

Comparative advantage: the ability of one country to produce a good or service more efficiently than another country as determined by their opportunity costs. We compare two goods when talking about comparative advantage, like producing cars and airplanes. A country cannot have a comparative advantage in both goods, since the test is which one it can produce more efficiently.

Trade deficit: the amount by which the cost of a country's imports exceeds the value of its exports.