Comparative advantage is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. … When used to describe international trade, comparative advantage refers to the products that a country can produce more cheaply or easily than other countries. 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.10-Jun-2021 Absolute advantage: The capability to produce more of a given product using less of a given resource than a competing entity. comparative advantage: The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another. Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor. Comparative Advantage and Free Trade

    Comparative advantage is a key principle in international trade and forms the basis of why free trade is beneficial to countries. The theory of comparative advantage shows that even if a country enjoys an absolute advantage in the production of goods.

    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 absolute and comparative advantage in international trade?

    Absolute advantage: The capability to produce more of a given product using less of a given resource than a competing entity. comparative advantage: The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another.

    What is the concept of comparative advantage?

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

    Which kind of international trade is explained by the theory of comparative advantage?

    Comparative Advantage and Free Trade

    Comparative advantage is a key principle in international trade and forms the basis of why free trade is beneficial to countries. The theory of comparative advantage shows that even if a country enjoys an absolute advantage in the production of goods.

    What is the comparative advantage of the Philippines in international trade?

    The Philippines has a revealed comparative advantage in exporting from high technology industries. They constitute more than 50 percent of total goods exports, and they were affected during the global financial crisis.

    What countries have a comparative advantage?

    For example Ireland has a comparative advantage in cheese and butter due to climate and a large amount of land suitable for dairy cows. China has a comparative advantage in electronics because it has an abundance of labor.

    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 is the difference between comparative and competitive advantage?

    The key distinction is that while comparative advantage seeks to explain patterns and gains from trade, the competitive advantage explains which firms, industries or nations will be winners in a global competition and how they can position for it.

    What is the difference between absolute advantage and comparative advantage with examples?

    To calculate comparative advantage, find the opportunity cost of producing one barrel of oil in both countries. The country with the lowest opportunity cost has the comparative advantage. With the same labor time, Canada can produce either 20 barrels of oil or 40 tons of lumber.

    How do you do comparative advantage?

    comparative advantage is the key to determining specialization and trade. Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers. … They can then trade for the goods for which other countries have a comparative advantage.

    How does a country use the idea of comparative advantage to decide when to trade?

    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.

    When a country has a comparative advantage in the production of a good?

    Comparative advantage is when a country has a lower opportunity cost to produce the good than another. … Comparative advantage leads to gains from trade when countries specialize and produce mainly what they do best.

    In what commodities do you think the Philippines has a comparative advantage Why?

    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.

    Comparative advantage theory

    Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.

    Absolute advantage theory

    Although the Philippines have a comparative advantage in rice production, exports were unprofitable for the government-marketing agency in 1977 to 1979. Government control of exports puts a barrier between world and domestic markets so that world quality premiums are not reflected in domestic prices.

    Free trade can help nations improve job opportunities in the economic market. … This comparative advantage usually allows companies to offer higher employee wages, since few nations or companies are able to reproduce the specific goods.

    Comparative advantage is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. … Comparative advantage suggests that countries will engage in trade with one another, exporting the goods that they have a relative advantage in.

    How does a country use the idea of comparative advantage to decide when to trade 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. more
    What are the effects of free trade quizlet?
    Trade allows a greater variety of goods and services. Cost effectiveness: It is cheaper to buy from other countries rather than producing themselves. Lower prices for consumers: When there is free trade, consumers can free to buy goods from the producer who is willing to sell at the lowest prices. more
    What is a free trade agreement quizlet?
    Free Trade Agreements define. It's a bilateral or multilateral written agreement between countries with a set of regulations. FTAs are designed to reduce the barriers such as tariffs and trade quotas to increased economic integration between participating countries. more
    Who benefits from trade barriers quizlet?
    what are the BENEFITS of trade barriers? -Protect domestic industries from competition. more
    What is the effect of trade barriers quizlet?
    trade barriers effects. temporarily save domestic jobs in certain industries, but without competition, those industries might continue to operate inefficiently. trade war. a succession of trade barriers between nations. impacts of trade barriers. more
    When can two countries gain from trade quizlet?
    explanation: Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods. All that is necessary is that each country have a comparative advantage in some good. Certain very talented people have a comparative advantage in everything they do. more
    Which trade policy distinguished between domestic trade and international trade?
    It is also known as domestic trade or home trade. more
    Which is a purpose of trade restrictions quizlet?
    Trade restrictions can protect domestic industries, save jobs, bring in revenue for a government, and help a country attain a political or social goal. more
    Why does reducing trade barriers promote increased international trade quizlet?
    Traded goods cost more when there are high tariffs, and this limits their sale. Protective tariffs increase the price of goods and limit the sale of those goods. Free trade leads to lower prices and greater sales. Lower production costs help lure foreign investment. more
    What is an advantage of free trade agreement quizlet?
    Trade allows a greater variety of goods and services. Cost effectiveness: It is cheaper to buy from other countries rather than producing themselves. Lower prices for consumers: When there is free trade, consumers can free to buy goods from the producer who is willing to sell at the lowest prices. more
    Which of the following is international trade * trade between countries trade between regions trade between provinces?
    question. Trade between countries is international trade. more

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