What kind of advantage does a country have if you can make a product more efficiently quizlet?

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What kind of advantage does a country have if you can make a product more efficiently quizlet?

Absolute advantage means a country has a monopoly on a certain product or can produce the product more efficiently than any other country.

How could a company or country create an absolute advantage of a product?

Absolute advantage can be accomplished by creating the good or service at a lower absolute cost per unit using a smaller number of inputs, or by a more efficient process.

What advantages do countries gain from trading with each other?

Trade between two agents or countries allows the countries to enjoy a higher total output and level of consumption than what would have been possible domestically. Canada and Mexico can each specialize in the good they have a comparative advantage in and exchange with one another.

What are the advantages of comparative advantage?

The benefit of comparative advantage is the ability to produce a good or service for a lower opportunity cost. A comparative advantage gives companies the ability to sell goods and services at prices that are lower than their competitors, gaining stronger sales margins and greater profitability.

What kind of advantage does a nation have when they can literally make more of a product than a rival nation?

Absolute advantage is a country's ability to produce a given product more efficiently than can another country; comparative advantage is a country's ability to produce a given product relatively more efficiently than can another country.

What should a country do if it has a comparative advantage in a product quizlet?

In order to maximize trade according to the principles of comparative advantage, country Y should produce food and import clothes from country X. nations produce a surplus at a lower cost and export it for goods that are too costly to produce.

What kind of advantage does a country have?

A country has an absolute advantage in those products in which it has a productivity edge over other countries; it takes fewer resources to produce a product. A country has a comparative advantage when a good can be produced at a lower cost in terms of other goods.

Why are countries motivated to trade with one another?

The five main reasons international trade takes place are differences in technology, differences in resource endowments, differences in demand, the presence of economies of scale, and the presence of government policies. Each model of trade generally includes just one motivation for trade.

When a country can produce more of a given product than another country they have an?

Comparative advantage is a country's ability to produce more of a given product than can another country of comparative size; absolute advantage is a country's ability to produce a given product relatively more efficiently than a larger country.

When a country possesses a comparative advantage in the production of one good or service it?

If a country possesses the comparative advantage in the production of one good then it: cannot also possess the comparative advantage in the production of the other good.

How do nations gain by specializing in products for which they have a comparative advantage?

Nations trade because they gain by doing so. The principle of comparative advantage states that each country should specialize in the goods it can produce most readily and cheaply and trade them for those that other countries can produce most readily and cheaply.

What is absolute advantage and examples?

Absolute advantage is where a nation is more efficient at making a product than another. In other words, it requires fewer resources to make a final good or service. For instance, Brazil has an absolute advantage in making coffee beans.

What is competitive advantage and absolute advantage?

Comparative advantage is contrasted with absolute advantage. Absolute advantage refers to the ability to produce more or better goods and services than somebody else. Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality.

What are the advantages and disadvantages of international trade?

Top 10 International Trade Pros & Cons – Summary List

International Trade Pros International Trade Cons
Faster technological progress Depletion of natural resources
Access to foreign investment opportunities Negative pollution externalities
Hedging against business risks Tax avoidance

What is the absolute advantage in economics?

Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor. Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.

What is absolute advantage and comparative advantage?

Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor. Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.

Why should countries specialize in producing goods with which they have a comparative advantage rather than an absolute advantage?

Comparative Advantage 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.

What country has an absolute advantage?

Examples of absolute advantage China, Thailand, and Vietnam, on the other hand, produce and export low-cost manufactured goods. These three countries have an absolute advantage because of their considerably lower unit labor costs.

What is competitive advantage in economics?

Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.

What are the three main advantages of international trade?

Advantages and Disadvantages of International Trade

  • International trade helps each country to make optimum use of its natural resources. …
  • Foreign trade leads to specialisation and encourages production of different goods in different countries. …
  • International trade irons out wild fluctuations in prices.

What is the advantage of international business?

One of the top advantages of international business is that it increases the number of potential clients. Each country added to the client opens up a new pathway to business growth and increased revenues. Generally international business is more profitable than domestic business.

What is comparative advantage example?

For example, if a country is skilled at making both cheese and chocolate, they may determine how much labor goes into producing each good. If it takes one hour of labor to produce 10 units of cheese and one of of labor to produce 20 units of chocolate, then this country has a comparative advantage in making chocolate.

Why should countries specialize in producing goods with which they have a comparative advantage rather than an absolute advantage 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.

Why should countries specialize in producing a particular good or service in which they have a comparative advantage?

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. A larger quantity of outputs becomes available to the trading nations.

What are the 3 competitive advantages?

There are three strategies for establishing a competitive advantage: Cost Leadership, Differentiation, and Focus (Cost-focus and Differentiation-focus).

What are some advantages of international business?

Here are seven of the most common advantages involved with expanding your business on an international scale:

  • New Revenue Potential. …
  • The Ability to Help More People. …
  • Greater Access to Talent. …
  • Learning a New Culture. …
  • Exposure to Foreign Investment Opportunities. …
  • Improving Your Company's Reputation. …
  • Diversifying Company Markets.

What are the advantages of exporting?

Exporting offers plenty of benefits and opportunities, including:

  • Access to more consumers and businesses. …
  • Diversifying market opportunities so that even if the domestic economy begins to falter, you may still have other growing markets for your goods and services.
  • Expanding the lifecycle of mature products.

What are the advantages and disadvantages of international business with examples?

Advantages and Disadvantages of International Business

  • Meaning of International Business.
  • Advantages of International Business. Increased Revenues. Reaching new customers. Accessing new talent. …
  • Disadvantages of International Business. Language Barriers. Economic Dependence. Mis-utilization of Natural Resources.

What are the advantages and disadvantages of international business expansion?

Advantages of International Expansion

  • Entry to new markets. …
  • Access to local talent. …
  • Increased business growth. …
  • Stay ahead of the competition. …
  • Regional centres. …
  • Cost of establishing and termination of an entity. …
  • Compliance risk. …
  • Business practices and cultural barriers.

What country has a comparative advantage?

For example, countries with plentiful oil resources can generally produce oil inexpensively. Because Saudi Arabia produces oil very cheaply, it holds a comparative advantage in oil, and it exports oil in order to finance its purchases of imports.