Business 101 Chapter 3
Opportunity Cost - ANS-The opportunity of giving up the second-best choice when
making a decision
Absolute Advantage - ANS-The benefit a country has in a given industry when it can
produce more of a product than other nations using the same amount of resources
Comparative Advantage - ANS-The benefit a country has in a given industry if it can
make products at a lower opportunity cost than other countries
Balance of Trade - ANS-A basic measure of the difference in value between a nation's
exports and imports, including both goods and services
Trade Surplus - ANS-Overage that occurs when the total value of a nation's exports is
higher than the total value of its imports
Trade Deficit - ANS-Shortfall that occurs when the total value of a nation's imports is
higher than the total value of its exports
Balance of Payments - ANS-A measure of the total flow of money into or out of a
country
Balance of Payments Surplus - ANS-Overage that occurs when more money flows into
a nation than out of that nation
Balance of Payments Deficit - ANS-Shortfall that occurs when more money flows out of
a nation than into that nation
Exchange Rates - ANS-A measurement of the value of one nation's currency relative to
the currency of other nations
Countertrade - ANS-International trade that involves the barter of products for products
rather than for currency
Foreign Outsourcing - ANS-(Also contract manufacturing) Contracting with foreign
suppliers to produce products, usually at a fraction of the cost of domestic production
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