A nation will tend to export a good for which it has a comparative advantage because it has the lowest opportunity cost .
Will a country import or export products for which it has a comparative advantage?
Comparative advantage suggests that countries will engage in trade with one another , exporting the goods that they have a relative advantage in. Absolute advantage refers to the uncontested superiority of a country to produce a particular good better.
Why do countries export goods in which they have comparative advantage?
The theory of comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production. Comparative advantage suggests that countries will engage in trade with one another , exporting the goods that they have a relative advantage in.
What is comparative advantage and absolute advantage?
Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.
How do countries know when they have a comparative advantage in the production of a good quizlet?
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 are the four main sources of comparative advantage?
What are the Sources of Comparative Advantage? Comparative advantage is determined by a country's resources, that is the land, labour, capital and enterprise .
Can a country have comparative advantage in both goods?
Comparative Advantage vs.
A comparative advantage exists when a country can produce goods at a lower opportunity cost compared to other countries. It is not possible for a country to have a comparative advantage in all goods .
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.
Which region is most likely to export bananas?
Ecuador is the largest exporter of bananas in the world and its share of world banana trade is on the increase. Exports expanded from one million tonnes in 1985 to 3.6 million tonnes in 2000.
Which situation is the best example of opportunity cost?
It is the important concept in economics and also the relationship which is between choice and scarcity. A good example of opportunity cost is you can spend money and time on other things but you can not spend time reading books or the money in doing something which can help .
What is the difference between absolute advantage and comparative advantage with examples?
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What is an example of absolute advantage?
Absolute advantage refers to the ability of a country to produce a good more efficiently than other countries . ... For example, the Canadian economy, which is rich in low cost land, has an absolute advantage in agricultural production relative to some other countries.
How do you find comparative advantage?
To calculate comparative advantage, find the opportunity cost of producing one barrel of oil in both countries . The country with the lowest opportunity cost has the comparative advantage.
What has a comparative advantage in producing 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.
How do countries know when they have a comparative advantage in the production of a good?
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.
Which country has a comparative advantage in the production of shirts?
For China , the opportunity cost of 1 shirt is 1/10 computer. For the United States, the opportunity cost of a shirt is 1/5 computer. Therefore, China has a comparative advantage in the production of shirts and the United States has a comparative advantage in the production of computers.
