Who has the comparative advantage in the production of good X?
If a nation has a comparative advantage in the production of good X then: It can produce X at a lower opportunity cost. In considering the distribution of the gains from trade: Smaller countries usually get a larger portion of the gains from trade.
When a country has a comparative advantage in the production of a good?
A country has a comparative advantage in the production of a good if the opportunity cost of producing that good is lower in that country. Even if one country has an absolute advantage in all goods, it will still gain from trading with another country.
Which conditions would allow country X to have an absolute advantage over country Y?
Q. Which conditions would allow Country X to have an absolute advantage over Country Y in the production of automobiles? Country X's workers earn higher wages.
When a country has a comparative advantage in the production of a good it means that it can produce 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.
What is comparative advantage quizlet?
Comparative advantage refers to the ability to produce goods and services at a lower opportunity COST, not necessarily at a greater volume.
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.
What is comparative advantage and how does comparative advantage for a particular country determine what that country produces and trades with other countries?
Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality. Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products.
What is absolute 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.
What do economists mean when they say a country has a comparative advantage in the production of a particular good?
STUDY. What do economists mean when they say a country has a comparative advantage in the production of a particular good? That the country can produce the good at a lower opportunity cost than other countries.
In which situation does one country have a comparative advantage over another country quizlet?
one country has comparative advantage over another in the production of a particular good relative to other goods if it produces that good less inefficiently (more efficiently) compared with the other country.
What best defines comparative advantage?
Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality. Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products.
What does the term comparative advantage mean?
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.
How do you find comparative advantage?
Steps to Calculating Comparative Advantage A country is said to have a comparative advantage if it produces a good or service with the lowest opportunity cost. Opportunity cost in a comparative advantage context is what is the loss of one good when producing the other.
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.
How is comparative advantage defined?
Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality. Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products.
What is the meaning 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.
How does a country use the idea of comparative advantage to decide when to trade?
A country has a comparative advantage when a good can be produced at a lower cost in terms of other goods. Countries that specialize based on comparative advantage gain from trade.
How does comparative advantage affect trade between countries?
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.
Which is an example of comparative advantage quizlet?
Country 2 can gain comparative advantage by producing their pants and shoes at a lower cost. Also by using less resources to produce their goods. A person with comparative advantage produces something at a lower cost while absolute advantage is being better at producing something than someone else.
What is meant by comparative advantage quizlet?
Comparative advantage refers to the ability to produce goods and services at a lower opportunity COST, not necessarily at a greater volume.
What is the theory of comparative advantage quizlet?
The theory of comparative advantage states that under certain conditions, countries can benefit from specialization in the production of goods and services which they have comparative advantage in and trade them for goods and services which they do not have comparative advantage in.
What is the meaning of comparative advantage in economics?
comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.
What makes a country economically advantageous compared to other nation or state?
In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.
How can a nation that is less efficient than another nation in the production of all commodities export anything to the second nation?
A less efficient nation can also export to the more efficient nation by implementing and incorporating competitive advantage in its international trade policies.
What is the main concept of comparative advantage?
Key Takeaways Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. The theory of comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production.
What is a comparative advantage explain the theory of comparative advantage using an example?
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.