When a country has a comparative advantage in the production of a certain good?

When a country has a comparative advantage in the production of a certain good?

Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers. Countries are better off if they specialize in producing the goods for which they have a comparative advantage.

What does it mean for a country to have a comparative advantage in the production of a good or service?

Comparative advantage is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage suggests that countries will engage in trade with one another, exporting the goods that they have a relative advantage in.

When a country has a comparative advantage it means that it can produce a good at a lower?

In economics, a comparative advantage occurs when a country can produce a good or service at a lower opportunity cost. The than another country. The theory of comparative advantage is attributed to political economist David Ricardo, who wrote the book Principles of Political Economy and Taxation (1817).

What are the factors that give some nations a comparative advantage?

The existence of a comparative advantage is, in turn, affected by things such as abundance, productivity, cost of labor, land, and capital. Other factors also might influence a country’s comparative advantage in practical terms, such as a highly developed financial system or economies of scale.

When a country has a comparative advantage?

A country has a comparative advantage when a good can be produced at a lower cost in terms of other goods. Countries that specialize based on comparative advantage gain from trade.

What is the comparative advantage of the Philippines?

The Philippines has a revealed comparative advantage in exporting from high technology industries. They constitute more than 50 percent of total goods exports, and they were affected during the global financial crisis.

Has a comparative advantage in the production of?

A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else. Having a comparative advantage is not the same as being the best at something. In fact, someone can be completely unskilled at doing something, yet still have a comparative advantage at doing it!

What are the advantages of comparative advantage?

The benefit of comparative advantage is the ability to produce a good or service for a lower opportunity cost. A comparative advantage gives companies the ability to sell goods and services at prices that are lower than their competitors, gaining stronger sales margins and greater profitability.

What are some examples of comparative advantages?

For example, if a country is skilled at making both cheese and chocolate, they may determine how much labor goes into producing each good. If it takes one hour of labor to produce 10 units of cheese and one of of labor to produce 20 units of chocolate, then this country has a comparative advantage in making chocolate.

In what commodities do you think the Philippines has comparative advantage Why?

Although the Philippines have a comparative advantage in rice production, exports were unprofitable for the government-marketing agency in 1977 to 1979. Government control of exports puts a barrier between world and domestic markets so that world quality premiums are not reflected in domestic prices.

What makes a country have a comparative advantage?

Companies in Country A can produce computers at a lower cost. Its production costs for clothing were the lowest in the world. Under which circumstance would a country have a comparative advantage in the production of a certain good It has a lower opportunity cost for production of that good.

Can a country have an absolute advantage in trade?

Common Misperceptions A country that has an absolute advantage in producing all goods still stands to benefit from trade with other countries, since the basis of the gains for trade is comparative advantage, not absolute advantage. It is not possible for an individual or country to have a comparative advantage in all goods.

How are production technology differences reflected in comparative advantage?

Production technology differences exist across industries and across countries and are reflected in labor productivity parameters. The labor and goods markets are assumed to be perfectly competitive in both countries. Firms are assumed to maximize profit while consumers (workers) are assumed to maximize utility.

How does Canada and Mexico have comparative advantage?

Canada and Mexico can each specialize in the good they have a comparative advantage in and exchange with one another. This lets both countries enjoy more maple syrup and avocados than they could have enjoyed without trade.