MKT-2.B—a. Explain (using data from PPCs or tables as appropriate) how specialization according to comparative advantage with appropriate…

a. Explain (using data from PPCs or tables as appropriate) how specialization according to comparative advantage with appropriate terms of trade can lead to gains from trade. b. Calculate (using data from PPCs or tables as appropriate) mutually beneficial terms of trade.

• Production specialization according to comparative advantage, not absolute advantage, results in exchange opportunities that lead to consumption possibilities beyond the PPC.
• Comparative advantage and opportunity costs determine the terms of trade for exchange under which mutually beneficial trade can occur.
• Enduring understanding MKT-2: The consequences of scarcity can be mitigated through specialization in production and by exchange.