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Chapter 16 Achieving Economic Stability (Misery Index- sum of the monthly…
Chapter 16 Achieving Economic Stability 
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NAFTA- an agreement to create fewer trade restrictions and reduce tariffs between the United States, Canada and Mexico.
NAFTA has allowed all three nations to benefit from the comparative advantage each nation has in certain markets.
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Comparative Advantage- the ability to produce a product relatively more efficiently, or at a lower opportunity cost
Country A and Country B both produce chocolate. Country has the absolute advantage in all markets but still trades with Country B for chocolate because Country B has the comparative advantage in the chocolate market.
Comparative advantage was ignored for years as a useless measure for the basis of trade. It is now known that this is a very important measure.
A country that has an absolute advantage in all markets can still benefit from trade with a smaller nation due to comparative advantage.