Eco 102 H Lt Review (Chapter 3)

Those people providing you goods and services are acting out of generosity. 

The Production Possibilties Frontier is drawn bowed out if the rate at which the society could trade one good for the other doesn't depend on the amounts that were being produced; and straight if the switching between to goods doesn't have a constant rate. 

A Production Possibilities Frontier without trade is called a comaparative advantage possibilities frontier. 

The opportunity cost measures the trade-off between the two goods that each producer faces. 

Economists use the term comparative advantage when describing the opportunity cost of two producers. 

It is impossible for one person to have a comparative advantage in both goods. 

The gains from specialization and trade are based not on comparative advantage but on absolute advantage. 

A bargain is when each producer benefits from trade by obtaining a good at a price that is lower than his or her opportunity cost of that good. 

Trade can benefit everyone in a society because it allows people to specialize in activities in which they have an absolute advantage. 

For both parties to gain from trade, the price at which they trade must lie between their original cost of the product. 

The price for bargain need not be exactly in the middle for both parties to gain. 

International trade can make some individuals worse off, even as it makes the country as a whole better off.