AP Macroeconomics : Basic Concepts for Macroeconomics Quiz

Quiz
*Theme/Title:	Basic Concepts for Macroeconomics
* Description/Instructions
A basic concept in macroeconomics is comparative advantage. The ability to produce one good at a relatively lower opportunity cost than other goods, especially compared to production in another country. Every person or country has a comparative advantage in production of at least one good or service, even with relatively limited production technology. A related, but contrasting concept is absolute advantage. Both terms are perhaps most important to the study of international trade, but also provide insight into other exchanges. Another basic concept is absolute advantage. Absolute advantage is the general ability to produce more goods or services using fewer resources. A person or country has an absolute advantage in production largely due to superior technology or greater technical efficiency. A related, but contrasting concept is comparative advantage. Both terms are perhaps most important to the study of international trade, but also provide insight into other exchanges. The terms of trade is the rate at which goods are traded, either between individuals or between nations. It is the quantity of one good exchanged per unit of another good. The terms of trade is essentially the price. But the price is stated in terms of the quantity of another good. Like any market price, the terms of trade is based on what the buyers are willing to pay and what the sellers are willing to accept. The terms of trade between any two countries is based on the relative opportunity cost in each country.
Group:	AP Macroeconomics AP Macroeconomics Quizzes
Topic:	AP Macroeconomics

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