Transcribed image text: When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner . Then the country will specialize in the production of this good and trade it for other goods.
What should countries do when they have the comparative advantage for producing a good?
More specifically, countries should import goods if the opportunity cost of importing is lower than the cost of producing them locally. Specialization according to comparative advantage results in a more efficient allocation of world resources. Larger outputs of both products become available to both nations.
When a producer has a comparative advantage?
When a producer has a comparative advantage in producing a good, it means the producer: has the ability to produce the good at a lower opportunity cost than others . Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day.
Which country has a comparative advantage in producing?
Again recall that comparative advantage was defined as the opportunity cost of producing goods. Since Saudi Arabia gives up the least to produce a barrel of oil, (1414 < 22 in Table 4) it has a comparative advantage in oil production.
How do countries know when they have a comparative advantage in the production of a good group of answer choices Government Accountants collect cost data from countries and analyze it to find out which country has a comparative advantage in the production of which good they know as the result of individuals trying?
The United Nations Economic Conference Group analyzes cost data from countries and determines which country has a comparative advantage in the production of which good. b. They know as the result of individuals trying to earn profits and buying low and selling high in the process.
Why can’t a country have comparative advantage in both goods?
In international trade, no country can have a comparative advantage in the production of all goods or services. In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners.
Why do countries not completely specialize?
In the real world, specialization is not complete. Why do countries do not completely specialize? – Because not all goods are traded internationally . ... – Because production of most goods involves increasing opportunity costs.
What is an example of a comparative advantage?
Comparative advantage is what you do best while also giving up the least . For example, if you’re a great plumber and a great babysitter, your comparative advantage is plumbing. That’s because you’ll make more money as a plumber.
What is David Ricardo’s theory of comparative advantage?
Among the notable ideas that Ricardo introduced in Principles of Political Economy and Taxation was the theory of comparative advantage, which argued that countries can benefit from international trade by specializing in the production of goods for which they have a relatively lower opportunity cost in production even ...
How is comparative advantage determined?
In order to determine if comparative advantages exist between the two countries, you have to figure out the opportunity cost of making one unit of one of the items . ... Their opportunity costs are lower for each of these products relative to one another, and so there is potential for beneficial trade.
Which country has the comparative advantage in producing corn?
The United States gives up the least to produce a bushel of corn, so it has a comparative advantage in corn production.
Which country has a comparative advantage in the production of honey?
The United States has a comparative advantage in the production of honey and Canada has a comparative advantage in the production of maple syrup.
Which country has the absolute advantage in bananas?
Puerto Rico has the absolute advantage in bananas, while Jamaica has the absolute advantage in sugar cane.
How do countries know when they have a comparative advantage in the production of a good group of answer choices?
Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers . Countries are better off if they specialize in producing the goods for which they have a comparative advantage.
What should a country do if it has a comparative advantage in a product quizlet?
A country with a comparative advantage can produce a product at a lower opportunity cost , even if another country has an absolute advantage in the production of all goods.
When a country has a comparative advantage in the production of a good quizlet?
A country has comparative advantage in the production of a good if it can produce that good at a lower opportunity cost relative to another country . the difference between the opportunity cost of producing the product domestically versus the cost of purchasing the product from another country receives from trade.
