absolute advantage - the situation in which one person or country can produce goods with a smaller
input of resources than another
comparative advantage - the situation in which one producer has a smaller opportunity cost of
producing a good or service compared to another producer
trade - purchases between countries
export - goods and services that producers create within a country and then sell and send to people,
companies, or governments in other countries
import - goods and services that producers in other countries make and then people, companies, and
governments purchase and bring into a different country
specialization - concentrating on one kind of work
protectionism - to protect domestic industries from what the government in that country sees as unfair
competition from foreign industries
import tariff - a tax placed on goods that businesses import into a country
sanction - an order forbidding citizens from trading with another country
subsidies - government payments to industries that have to compete in a world market where prices are
lower than they are in the producing country
NAFTA - North American Free Trade Agreement
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