What is comparative advantage and what are some examples of this concept at work in the United States?
What is comparative advantage, and what are some examples of this concept at work in the United States? Comparative advantage is the theory that a country should sell their products that they can produce most effectively to those countries who cannot produce the products effectively or at all.
What products does the United States have a comparative advantage?
The United States has a revealed comparative advantage in exporting capital goods, chemicals, miscellaneous goods, plastics, rubber and transportation.
In what good does the United States have a comparative advantage?
In what good does the United States have a comparative advantage? c. Is there a possible trade that benefits both countries? Japan has a comparative advantage in cloth and will trade cloth for wheat; the United States has a comparative advantage in wheat and will trade wheat for cloth.
What is called absolute advantage?
Absolute advantage is the ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time, or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than another entity that produces …
Which country has the absolute advantage in producing freezers please explain why?
Germany Therefore, Germany has an absolute advantage in the production of both freezers and dishwashers, simply because they can produce more than Italy. 7 A country is said to have a comparative advantage in whichever good has the lowest opportunity cost.
What is the difference between absolute advantage and comparative advantage quizlet?
Explain how absolute advantage and comparative advantage differ. Absolute advantage is the ability to produce a good using fewer inputs than another producer, while comparative advantage is the ability to produce a good at a lower opportunity cost than another producer (reflecting the relative opportunity cost).
Is comparative advantage good for developing countries?
Together, these developments improve economic output and opportunities for both developed and developing nations. These factors also cause greater specialization based on comparative advantage. Countries with the lowest labor costs have a comparative advantage in basic manufacturing.
What is an absolute advantage in economics?
Absolute advantage, economic concept that is used to refer to a party’s superior production capability. Specifically, it refers to the ability to produce a certain good or service at lower cost (i.e., more efficiently) than another party.
Is it true that a country needs to have an absolute advantage in the production of a good in order to benefit from trade in that good?
If gains from trade are based solely on comparative advantage, and if all countries have the same opportunity costs of production, then there are no gains from trade. If a nation has an absolute advantage in the production of a good, it can produce that good using fewer resources than its trading partner.
What does the United States have an absolute advantage in?
The United States has an absolute advantage in productivity with regard to both shoes and refrigerators; that is, it takes fewer workers in the United States than in Mexico to produce both a given number of shoes and a given number of refrigerators.
Does Brazil have an absolute advantage?
Brazil has the absolute advantage in producing beef and the United States has the absolute advantage in autos. The opportunity cost of producing one pound of beef is 1/10 of an auto; in the United States it is 3/4 of an auto….Self-Check Questions.
| Country | One Sweater | One Bottle of wine |
|---|---|---|
| Tunisia | 2 workers | 3 workers |