PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
7th Edition
ISBN: 9781264088980
Author: Frank
Publisher: MCG
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Chapter 16, Problem 1RQ
To determine

Describe the comparative and absolute advantages between US and china.

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Explanation of Solution

The US has absolute and comparative advantages in designing a new model. This is because the US workers only take a quarter of time than Chinese workers to design a new model. Also, the US has the absolute advantage in the production of a new model and Chinese has the comparative advantage. This is because the US only takes half of time than Chinese workers to produce a new good and the Chinese workers produces a million piece of the new model.

Economics Concept Introduction

Absolute advantage: Absolute advantage is an advantage of a country to produce more than its competitors using the same or less production time and resources.

Comparative advantage: Comparative advantage is an advantage of a country to produce at a lower opportunity cost than its competitors.

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