Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Economics of nations
Absolute advantage in trade and specifically production is when a given country has the best and most efficient way of producing the goods than any other country involved in that given trade. On the other hand, the comparative advantage focuses on a single country producing say two products and the same products being produced by another country. If country X can produce product A at cheaper economic sacrifice and cost than they produce product B, yet country Y can produce product B at a cheaper economic sacrifice and cost than A, it can then be said that country X has a comparative advantage in product A as compared to country Y and the same applied to country Y on product B.
The country in consideration here is Brazil, its top major exports are sugarcane, beef, motor vehicles and spare parts, textiles and steel. On the beef, textile and sugarcane it can be said that Brazil has absolute advantage and on the steel and motor vehicle it can be said that other nations like Japan have the comparative advantage.
The major exports for the US are soybeans, corn, fruit, organic chemicals, aircraft, motor vehicle parts, computers, telecommunication equipment, automobiles, medicine...
Free trade reduces the cost of importation, hence reduction in business production cost hence promoting economic growth. It also improves efficiency in trade and encourages innovation as there are goods from outside to offer competition. Protectionism on the other hand…
References
CIA, (2018). World Factbook: US. Retrieved May 18, 2018 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
Lore Central, (2018). Advantages and Disadvantages of Protectionism. Retrieved May 18, 2018 from https://www.lorecentral.org/2017/11/advantage-disadvantage-protectionism.html
US Debt Clock, (2018).US National Debt. Retrieved May 18, 2018 from http://www.usdebtclock.org/
For Florida to have a comparative advantage with California in regards to the trade of oranges, Florida would have to be able to produce oranges cheaper than California. Florida would need some distinct productivity advantage, like cheaper fuel prices, cheaper labor, a more efficient production system. This comparative advantage would then exist only in relation to the trading of oranges between Florida and California. If one were to then compare
"This is because any actor's comparative advantage depends only upon the relationship between that single actor's own levels of productivity for two goods under consideration, while (www.auburn.edu). An example of the distinction between comparative and absolute advantage might be that Microsoft may have so much capital and available resources that it could produce, say, pizza at an absolute advantage, compared with the local Italian restaurant. But to do so, Microsoft
Adam Smith's theory of absolute advantage and Ricardo's theory of comparative advantage offer two economic approaches to international trade. Each theory contributes to the field of international economics in different ways. This literature review will compare the two theories through the lens of scholarly articles published on the respective subjects. By the 18th century (1776 to be exact), the development of international trade had reached a critical nexus: the colonies in
country has absolute advantage over other countries in producing a certain line of goods if it can produce those goods at a higher productivity level or a lower cost (Suranovic, 2015; Kilic, 2002). In contrast, a country has comparative advantage if it can produce the same goods at a lower opportunity cost than other countries (Suranovic, Kilic). These are the brief meanings of these two terms. A country possesses absolute
Further, while inequality may have increased, on average, within countries, inequality measured across all the people of the world, may actually be falling. Pritchett does not address this issue. In addition, Pritchett provides no explanation of why globalization is not rendering conditional occurrence a reality. This would have been useful for supporting the author's conclusion that divergent polices are needed to address the unique needs of specific countries. The most
Absolute Advantage A worker has an absolute advantage in the production of a good relative to another if it can produce the good at lower cost or with higher productivity (Armington, 1969). In this model we would say that worker 1 has an absolute advantage in both plumbing and masonry when compared to the worker 2. It is because worker 1 takes less number of hours in both of the activities: