The difference between comparative advantage and absolute advantage .

Question

Want to see more full solutions like this?

Answer 1

Question

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

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.

Economics Concept Introduction

Absolute advantage: Absolute advantage refers to the ability to produce a good using fewer inputs than another producer does.

Comparative advantage: Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Q32 Consider the Production Possibility Frontiers of two countries, Australia and Brazil. Assume both have linear PPFs and the two countries both produce the same two goods: fruits and grain. Given its resources, Australia can produce either 2 units of grain per day or 1 unit of fruits; Brazil can produce either 5 units of grain or 4 units of fruits. (You may, for your own use, find it helpful to draw the Production Possibilities Frontiers for each country, though these won't be included in the answers you provide in you online responses.) a. If there were no trade, what would be the local price of fruits in each country, measured in units of grain? b. If trade is allowed, which country will export fruits and which country will export grain (if any)? c. What are the gains from trading a unit of fruit if the international price of fruit is equal to the average of the local prices in the two countries? d. How are the gains from trade distributed? Comment on why the benefits…

Suppose the United States is currently producing 140 tons of hamburgers and 63 tons of tacos and Mexico is currently producing 14 tons of hamburgers and 35 tons of tacos. If the United States and Mexico each specialize in producing only one good (the good for which each has a comparative advantage), then a total of _____ additional ton(s) of hamburgers can be produced for the two countries combined (enter a numeric response using an integer) and a total of ____ additional ton(s) of tacos can be produced.

Ecuador’s biggest export is crude petroleum (unprocessed), 63% of which it exports to the United States, and Ecuador’s biggest import is refined petroleum (processed), of which it imports 70% from the United States. Based on this information, which of the following statements is true? Group of answer choices Ecuador has comparative advantage in extracting crude petroleum; the US has comparative advantage in producing refined petroleum. Not enough information. The US has comparative advantage in extracting crude petroleum; Ecuador has comparative advantage in producing refined petroleum. Ecuador has absolute advantage in extracting crude petroleum and the US has absolute advantage in producing refined petroleum.

Answer 2

Question

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

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.

Economics Concept Introduction

Absolute advantage: Absolute advantage refers to the ability to produce a good using fewer inputs than another producer does.

Comparative advantage: Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

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

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.

Economics Concept Introduction

Absolute advantage: Absolute advantage refers to the ability to produce a good using fewer inputs than another producer does.

Comparative advantage: Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

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

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.

Economics Concept Introduction

Absolute advantage: Absolute advantage refers to the ability to produce a good using fewer inputs than another producer does.

Comparative advantage: Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.

Economics Concept Introduction

Absolute advantage: Absolute advantage refers to the ability to produce a good using fewer inputs than another producer does.

Comparative advantage: Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer.

Answer 6

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.

Economics Concept Introduction

Absolute advantage: Absolute advantage refers to the ability to produce a good using fewer inputs than another producer does.

Comparative advantage: Comparative advantage refers to the ability to produce a good at a lower opportunity cost than another producer.

Answer 7

Chapter 2, Problem 1RQ

To determine

The difference between comparative advantage and absolute advantage.

Answer 8

Expert Solution & Answer

Explanation of Solution

Comparative advantage refers the ability of a nation to produce goods and services at a lower opportunity cost than others. On the other hand, absolute advantage refers to the cost advantage of a nation, which can produce large quantity of goods and services using same level of inputs. Suppose an individual or a firm can produce a particular good at a lower cost than others can, then the individual or the firm has a comparative cost in the production of that good. In addition, if an individual or a firm can produce greater quantity of a good using less units of input than others, then the individual or firm has an absolute advantage in the production of that particular good.