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When a person specializes in producing the good in which he or she has a comparative advantage total production in the economy?
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Why is the east said to have a comparative advantage in producing oil?
The east has a comparative advantage in producing oil because it has fewer labor costs. American workers in oil production are paid a premium because of the dangerous and technical nature of the field.
Why does country a have a comparative advantage over country b in the production of televisions?
Country A has a lower opportunity cost for producing televisions
When does Country A have a comparative advantage over Country B in the production of televisions?
Country A has a lower opportunity cost for producing televisions.
How is a comparative advantage obtained?
by producing a product with a lower opportunity cost
According to classical trade theory a country will export an item?
in which it has a comparative advantage in producing
Why is the east said to have a comparative advantage in producing oil?
The east has a comparative advantage in producing oil because it has fewer labor costs. American workers in oil production are paid a premium because of the dangerous and technical nature of the field.
Why does country a have a comparative advantage over country b in the production of televisions?
Country A has a lower opportunity cost for producing televisions
When does Country A have a comparative advantage over Country B in the production of televisions?
Country A has a lower opportunity cost for producing televisions.
How is a comparative advantage obtained?
by producing a product with a lower opportunity cost
According to classical trade theory a country will export an item?
in which it has a comparative advantage in producing
Will a nation tend to export or import goods which it has a comparative advantage?
A nation will export goods for which it has a comparative advantage. By exporting goods, it has the comparative advantage because it means they have a lower opportunity cost for producing the good. A country can produce it well and can produce most likely a lot of it.
What is a type of toy does LC Toys and Games have the greatest comparative advantage in producing?
Action Figures
What if one nation becomes more efficient than another nation at producing a specific product?
a comparative advantage
What south American country produces a great volume of wheat?
Argentina is a South American country that specializes in the production of wheat. The country also specializes in producing beef.
Difference between comparative cost advantage and absolute cost advantage?
Absolute advantage and comparative advantage are two basic concepts to international trade. Under absolute advantage, one country can produce more output per unit of productive input than another. With comparative advantage, if one country has an absolute (dis)advantage in every type of output, the other might benefit from specializing in and exporting those products, if any exist.A country has an absolute advantage economically over another, in a particular good, when it can produce that good at a lower cost. Using the same input of resources a country with an absolute advantage will have greater output. Assuming this one good is the only item in the market, beneficial trade is impossible. An absolute advantage is one where trade is not mutually beneficial, as opposed to a comparative advantage where trade is mutually beneficial.A country has a comparative advantage in the production of a good if it can produce that good at a lower opportunity cost relative to another country. The theory of comparative advantage explains why it can be beneficial for two parties (countries, regions, individuals and so on) to trade if one has a lower relative cost of producing some good. What matters is not the absolute cost of production but the opportunity cost, which measures how much production of one good, is reduced to produce one more unit of the other good.
What is the implication for free trade of the theory of comparative advantage?
Under the theory of comparative advantage two nations that each have a cost advantage in the production of a specific product would both benefit from free trade by selling to each other since the total output of both nation's products sold would increase. The mathematical theory of comparative advantage was formalized by David Ricardo in 1817 and hence became known as the "Ricardian model." Economists have long debated the usefulness of the comparative advantage model in the real world since it is counter-intuitive to many people due to the fact that the model is based on two countries producing only two goods and only one factor of production (such as labor). In addition, the model computes comparative cost advantages based on which nation produces goods at a lower opportunity cost which implies that a nation would have to forgo the production of other goods in order to achieve the lowest comparative advantage. Many economists and student of foreign trade prefer to use the theory of absolute advantage in production which is easy to understand since it is intuitive. Under the absolute advantage theory two countries that each produce a particular good at a much lower cost than the other would both become wealthier as they increased production to sell their goods to each other.
When might a country specialize in producing a particular good?
When a country has an absolute advantage in production of that good it may specialize in producing that good.
