Why Trade With Other Countries? Absolute advantage-producer has this if they can produce more of a good or service than the other with the same amount of resources Ex. Ecuador has a good source of climate and terrain for growing coffee, cocoa, and bananas, therefore if has an absolute advantage over the United States in producing those products Comparative advantage-one can produce a good or service at a lower opportunity cost, but both produce the …showed first 75 words of 550 total…

…showed last 75 words of 550 total…of cheap foreign labor Terms of trade-the price of exports relative to the price of imports -Countries improve the terms of trade to increase the purchasing power in the international marketplace -Either reducing the import price or increasing the export price can alter this Mercantilists-these people believed that a country should export more than they import, started in England with Queen I neomercantilists-believe the same as mercantilists, but are people the present day and time