When a country has a comparative advantage in the production of a good?
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.
Which country has a comparative advantage in producing food and which country has a comparative advantage in producing televisions?
Poland
Do all countries have a comparative advantage?
It is not possible for a country to have a comparative advantage in all goods. However, a country can have an absolute advantage in all goods. An absolute advantage exists when a country is simply the best (most efficient) in producing a product or service.
What is the key to comparative advantage?
The key to understanding comparative advantage is a solid grasp of opportunity cost. Put simply, an opportunity cost is a potential benefit that someone loses out on when selecting a particular option over another.
How can comparative advantage be improved?
It is being able to produce goods by using fewer resources, at a lower opportunity cost, that gives countries a comparative advantage. The gradient of a PPF reflects the opportunity cost of production. Increasing the production of one good means that less of another can be produced.
What are the causes of a comparative advantage?
Factors Affecting Comparative Advantage
- Factors of Production. A major factor that affects comparative advantage is the country’s quality and quantity of the factors of production.
- Exchange Rate. Movements in exchange rates affect the prices of imported and exported goods.
- Inflation.
- Trade Barriers.
Why does China have a comparative advantage?
If China can make more led light bulbs using 100 million workers than chemicals thus China has a comparative advantage. This means China can export more led light bulbs at a price that is more than the production cost while importing chemicals that are costly to make.
Who has a comparative advantage?
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else. Having a comparative advantage is not the same as being the best at something.
Who has a comparative advantage in producing kites Why?
Joe has a comparative advantage in producing kites because his opportunity cost for producing kites is lower than Sarah’s. c. Sarah has a comparative advantage in producing trains because her opportunity cost for producing trains is lower than Joe’s. 5.
Why does Hawaii have a comparative advantage in growing pineapples?
Hawaii has a comparative advantage in growing pineapples because of its good moist soil and very nice tropical climate. Not all regions or countries can get the resources to produce whatever goods/services they want to produce.
What is your opportunity cost if you work the cash register quizlet?
1) your opportunity cost if you work the cash register is that you do not produce food as fast and that would lead to less customers being satisfied and them waiting long for their food.
How does trade increase the variety and quantity of goods available?
How does trade increase the variety and quantity of goods available? Trade provides access to goods from around the globe. lower the cost of goods by using mass production. It puts goods in the hands of those who value them.
What is the best example of specialization?
Specialization is an approach to production in which individual workers become highly skilled at a specific task. For example, someone who works in a restaurant should only work on making burgers if it’s the only thing he knows how to do well.
What is an example of an absolute advantage?
For example, if Canada can produce 100 pounds of beef using two ranchers, while Argentina needs three ranchers to produce 100 pounds of beef, Canada has an absolute advantage over Argentina in beef production. Absolute advantage can be the result of a country’s natural endowment.
Which country or countries have an absolute advantage and comparative advantage in shoes?
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.
Which country has the absolute advantage in bananas?
Puerto Rico
Which country has an absolute advantage in sugar?
Mexico
Which country has absolute advantage?
In Table 1, Saudi Arabia has an absolute advantage in the production of oil because it only takes an hour to produce a barrel of oil compared to two hours in the United States. The United States has an absolute advantage in the production of corn.
Why does the United States not have an absolute advantage in coffee?
Why does the United States not have an absolute advantage in coffee? Other countries have much more favorable climates for growing coffee. not to have an absolute advantage? For example, the United States both exports and imports cars.
Which country has an absolute advantage in producing lumber?
Canada
What does China have an absolute advantage in?
China and Consumer Electronics: Many consumer electronics are manufactured in China. China can produce such goods more efficiently, which gives it an absolute advantage relative to many countries. Imagine that Economy A can produce 5 widgets per hour with 3 workers.
Which country has a comparative advantage in the production of cars?
Japan
What happens when a country has absolute advantage in all goods?
These high-income countries can produce all products with fewer resources than a low-income country. Even when one country has an absolute advantage in all products, trade can still benefit both sides. This is because gains from trade come from specializing in one’s comparative advantage.