Which situation is an example of comparative advantage?
When comparing the opportunity cost of 1 cloth for both France and the United States, we can see that the opportunity cost of cloth is lower in the United States. Therefore, the United States enjoys a comparative advantage in the production of cloth.
What causes comparative advantage to exist?
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.
Does comparative advantage always exist?
A comparative advantage exists when a country can produce goods at a lower opportunity cost compared to other countries. It is not possible for a country to have a comparative advantage in all goods. However, a country can have an absolute advantage in all goods.
What does it mean to have a comparative advantage in something?
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.
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 comparative advantage and what are some examples of this concept at work in the United States?
Comparative advantage is the theory that a country should sell their products that they can produce most effectively to those countries who cannot produce the products effectively or at all. The U.S. has a comparative advantage in producing software and engineering services. You just studied 29 terms!
Which of the following is true about comparative advantage?
Which of the following is true of comparative advantage? The law of comparative advantage states that the individual with the lower opportunity cost of producing a particular output should specialize in that output.
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.
How do you identify 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 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 comparative advantage quizlet?
Which of the following describes comparative advantage?
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 is used to explain why companies, countries, or individuals can benefit from trade.
Which of the following is a comparative advantage?
Comparative advantage includes inherited resources, such as labor, climate, arable land, and petroleum reserves.
Which of the following best describes comparative advantage?
Which of the following best describes the application of comparative advantage? Development focused on maximizing economic efficiency and well-being by focusing resources to produce whatever the country can produce relatively well compared to other countries and exports them in exchange for goods it does not produce.
What is an example of comparative advantage quizlet?
How is comparative advantage different from absolute advantage quizlet?
absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost.
When determining comparative advantage one must determine quizlet?
When determining comparative advantage, one must consider: opportunity cost. A trading advantage allows countries to: obtain goods they don’t have in exchange for goods they do produce.
What is the law of comparative advantage?
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.
How is comparative advantage different from absolute 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.