Answered: Indeed US is spending billions of…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter18: Trading With Other Nations

Section: Chapter Questions

Problem 8AA

See similar textbooks

Related questions

Question

Indeed US is spending billions of dollars with other countries for things we need. However, the open trade and the trade agreements allow US also to use its comparative advantage and export the products or services that we have better technology and thus cheaper to provide. For example, we have a comparative advantage on computer technology. Wouldn't this lead to overall benefits for all?

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

AI-Generated Solution

AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.