Chapter 17: Definitions Opportunity Cost | The opportunity of giving up the second-best choice when making a decision. | Absolute Advantage | The benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources. | Comparative Advantage | The benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries. | Balance of Trade | A basic measure of the difference in value between a nation's exports and imports, including both goods and services. | Trade Surplus | Overage that occurs when the total value of a nation's exports is higher than the total value of its imports. | Trade Deficit | Shortfall that occurs when the total value of a nation's imports is higher than the total value of its exports. | Balance of Payments | A measure of the total flow of money into or out of a country. | Balance of Payments Surplus | Overage that occurs when more money flows into a nation than out of a nation. | Balance of Payments Deficit | Shortfall that occurs when more money flows out of a nation than into that nation. | Exchange Rates | A measurement of the value of one nation's currency relative to the currency of other nations. | Countertrade | International trade that involves the barter of products for products rather than for currency. | Foreign Out coming | Contracting with foreign supplies to produce products, usually at a fraction of the cost of domestic production (also called manufacturing). | Importing | Buying products domestically that have been produced or grown in foreign nations. | Exporting | Selling products in foreign nations that have been produced or grown domestically. | Foreign Licensing | Authority granted by a domestic firm to a foreign firm for the rights to produce and market its product or to use its