Absolute
Advantage: Advantage when one seller produces more of the
same good than another seller
Buyer:
Any individual or organization that is seeking out/wishes to
buy a good or service
Comparative
Advantage: Advantage when one seller produces more of good A
in relation to good B than another seller.
Example:
James can make 5 cookies or 5 cakes in one hour. Laurie can make 4
cookes or 2 cakes in one hour. James has comparative advantage when it
comes to making cakes because making one cake is the equivolent of
making one cookie for him. However, for Laurie to bake one cake, it is
the equivolent of baking 2 cookies so she is not as relatively
efficient in this case. By the same logic, Laurie has comparative
advantage in making cookies than James.
Good:
Commodities that are produced, sold, bought, or traded in the market
Economy:
The result of the interaction between sellers, buyers, and
government in a market
Economics:
The study of the economy; how the economy works and why it works in
such a manner
Efficiency:
A measurement of the level of productive output in the effort to
maximize the output from resources
Globalization:
The process of making the world more economically interdependent
Input:
The resources and capital (money/investments) that are put in to
produce a good or service
International
Monetary Fund: An international organization dedicated to
promoting (money) exchange stability and orderly exchange arrangements
among nations
Invisible
Hand: Analogy by Adam Smith describing how the economy can be
function best and naturally without the presence of government planning
Market:
A forum for buying and selling a specific good or service
Output:
What is produced from resources and capital (money/investments)
Seller:
An individual or organization that sells goods or services in the
market
Service:
Work done for another for pay
Supply
& Demand: The fundamental idea of economics: sellers
supply what buyers demand at the lowest price/quantity that the seller
is willing to sell, and the highest price/quantity that buyers are
willing to pay. In a perfectly competitive market, supply and demand
phenomenon will allocate resources so that the production level is most
efficient.
Trade:
The act of paying for goods or services with goods or services that
you produce yourself
World
Bank: The World Bank attempts to fight poverty and raise the
standard of living in developing countries with the use of loans, aid,
advice, and technical assistence.
