MICROECONIMICS
MICROECONIMICS
5th Edition
ISBN: 9781319372101
Author: KRUGMAN
Publisher: MAC HIGHER
Question
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Chapter 8, Problem 2P
To determine

To Explain:

The likely source of the comparative advantage of each of the exporting countries:

  1. The United States exports software to Venezuela and Venezuela exports oil to the United States.
  2. The United States exports airplanes to China and China exports clothing to the United States.
  3. The United States exports sweat to Columbia and Columbia exports coffee to the United States.

Concept Introduction:

Comparative advantage is the ability to produce goods or services more efficiently i.e. at lower opportunity cost than any other activity. There are many sources of comparative advantage which are important in the production of a certain product in a nation. International differences in climate, factor endowments and technology are the sources of comparative advantage.

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