producing components. Korea focuses its production by increasing its scale, learning better ways to produce

screens and computer chips, and uses innovation to lower average costs of production. Apple, in turn, benefits

because it can purchase these quality products at lower prices. Put the global assembly line together and you have

the device with which we are all so familiar.
466 19 • Key Terms

Key Terms

absolute advantage when one country can use fewer resources to produce a good compared to another

country; when a country is more productive compared to another country

gain from trade a country that can consume more than it can produce as a result of specialization and trade

intra-industry trade international trade of goods within the same industry

splitting up the value chain many of the different stages of producing a good happen in different geographic

locations

tariffs taxes that governments place on imported goods

value chain how a good is produced in stages
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