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| absolute advantage | A country has an absolute advantage in the production of a product when it is more efficient than any other country at producing it. (See page(s) 167) |
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| comparative advantage | The theory that countries should specialize in the production of goods and services they can produce most efficiently. A country is said to have a comparative advantage in the production of such goods and services. (See page(s) 169) |
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| economies of scale | Cost advantages associated with large-scale production. (See page(s) 178) |
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| free trade | The absence of barriers to the free flow of goods and services between countries. (See page(s) 163) |
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| learning effects | Cost savings from learning by doing. (See page(s) 178) |
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| mercantilism | An economic philosophy advocating that countries should simultaneously encourage exports and discourage imports. (See page(s) 166) |
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| positive-sum game | A situation in which all countries can benefit even if some benefit more than others. (See page(s) 167) |
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| zero-sum game | A situation in which an economic gain by one country results in a economic loss by another. (See page(s) 167) |