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Flashcards in Specialisation Deck (12)
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1

What will a nation specialise in?

What they are best suited at

2

What is done with surplus from domestic consumption?

Traded overseas

3

Why is self-sufficiency not widely used opposed to specialisation?

Impractical

4

Why is Brazil less well off despite having the same minerals as Australia?

High crime, poor institution, unsustainable population growth, bad income distribution

5

Absolute advantage

Producing a good more efficiently than another nation

6

Comparative advantage

Where country without absolute advantage has the smallest disadvantage

7

Terms of trade

Rate at which countries exchange different commodities

8

Effect of specialising and trading

Higher living standards, consumption outside PPF

9

How is comparative advantage measured?

Opportunity cost, ratios

10

What are relative advantages of specialisation over self-sufficiency?

Gains from increased consumption/living standards

11

Self sufficiency

Grow own food. Make own clothes/houses

12

Benefits and costs of comparative advantage

Relatively more efficient time wise, not necessarily able to overall produce more, greater output for shorter time