Weegy: country has an absolute advantage in producing a good if it can simply produce more of that good than another country. For example, the U.S. could probably produce more t-shirts in a given year than a much smaller developing nation. [ A country has a comparative advantage in producing a good if it can produce that good at a lower opportunity cost. Using the same example, that smaller developing nation could probably produce t-shits at a much lower cost than could the U.S due to lower labor costs and various other likely reasons. Note that having an absolute advantage at producing a good does not indicate the nation also has a comparative advantage. Without formulating a model or specific example, know that trade should be based on comparative advantage because it allows nations to a) specialize in producing goods in which they can make cheaply, and b) trade those goods to a partner that values them at a greater price in exchange for other goods the country desires. In this case, trade is a win-win outcome that enables both countries to consume at a point on the exterior of their production possibilities frontier. For a more detailed exposition, read about the work of David Ricardo. ] (More)

Weegy: Principle #1: People Face Tradeoffs To get something you want, you have to give up something else you want. [ Scarce resources. Think of allocating your time or money. Societies face a tradeoff between more consumer goods (low taxes) and more public goods (defense, social programs). Since governments can borrow, there is a tradeoff between consumption for current and future generations. There is sometimes a tradeoff between the environment and jobs. equity: fair treatment efficiency: producing the biggest possible "pie". tradeoff between the two: will you sacrifice to become a doctor if your wealth is taxed? ] (More)