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If a country has comparative advantage in the production of all goods should it trade?
Yes, since each country can individually specialize in its comparative advantage, the total income for both countries will increase. This is even true if one country has an absolute advantage in the production of all goods.
Difference between absolute cost advantage theory and comparative cost advantage theory?
absolute cost advantage talks about the efficiency and cheaply a country incure in the production of goods and services against other country whiles comparative advantage talks about the opotunity cost of goods
In what ways can an economy be said to have a comparative advantage in the production of one good?
An economy can have a comparative advantage in the production of one good when it can produce that good at a lower opportunity cost compared to other goods. This means that the economy can produce the good more efficiently, allowing it to specialize in that particular product and trade with other economies for goods in which they have a comparative advantage.
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.
What are foreign goods?
Items brought into a country from another country are foreign goods.
If a country has comparative advantage in the production of all goods should it trade?
Yes, since each country can individually specialize in its comparative advantage, the total income for both countries will increase. This is even true if one country has an absolute advantage in the production of all goods.
Difference between absolute cost advantage theory and comparative cost advantage theory?
absolute cost advantage talks about the efficiency and cheaply a country incure in the production of goods and services against other country whiles comparative advantage talks about the opotunity cost of goods
Do you agree foreign textiles in India?
No, because it affect our economic system ,our textiles .Everyone wants to use foreign things if foreign textiles will start here then the production of foreign goods will increase and indian goods will be less demanded. So indian textile will will start to decrease .
In what ways can an economy be said to have a comparative advantage in the production of one good?
An economy can have a comparative advantage in the production of one good when it can produce that good at a lower opportunity cost compared to other goods. This means that the economy can produce the good more efficiently, allowing it to specialize in that particular product and trade with other economies for goods in which they have a comparative advantage.
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.
What are foreign goods?
Items brought into a country from another country are foreign goods.
What makes foreign goods more expensive?
Foreign goods are more expensive to purchase. The extra cost from purchasing foreign goods comes from the shipment of the goods over long distances.
What impact did technological advances have on the production goods?
production of goods was increased
What is the difference between a quota and a subsidy?
A quota is a limit on the amount of goods a foreign entity is allowed to export to the nation possessing the quota. A subsidy, on the other hand, is money paid directly or indirectly to local producers in order to advantage them in the market place compared to foreign producers which do not receive said subsidy. They are two different ways to shield domestic production from imports.
What goods used in the production of final goods?
Intermediate Goods
Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods?
true，if only one has comparative advantages.
What is foreign demand?
It is the foreign demand for domestic goods and services.
