The Market

Absolute advantage is when an industry in a country can produce a product more than other countries with the same resources. Comparative advantage is when an industry in a country can make a product at a lower opportunity cost than other countries. Opportunity cost is when giving up the second best choice when making a decision.

The modern day market place has changed dramatically with the implications of new technologies into the work process. From inventory systems, payroll software, to shipping methods the way companies handle day to day operations are always changing. Brick and Mortar stores may come a thing of the past with companies like Amazon, EBay, Google, and Walmart paving the way with new systems that are focused on shortening delivery times for online orders to same day delivery. With the convenience of same day delivery also comes with a multitude of problems these companies must overcome if they are going to beat out their competitors.

A description of the eighteen hundreds in one word would be amend. The trial and era years were in full swing and many people had thoughts about what was right and what was wrong. People had learned from past events such as the American revolution and America was growing into a powerful self-ruling nation. The market revolution brought upon the reform impulse which was impactful to events such as the abolishment of slavery and women’s rights.

1. Country A is extremely efficient in the mining of tin. However, its climate and terrain makes it difficult to produce corn. According to the theory of comparative advantage, Country A should:

Comparative advantage is the concept that production can be conducted with lower opportunity cost than a competitor. The lower cost of

Absolute advantage is the ability to produce more than one product efficiently and at the lowest cost. Comparative advantage is the ability to specialize in producing one product at the lowest cost. Comparative advantage affects trade the most because with specializing in producing one product the companies must trade to receive other products. Comparative advantage also considers the opportunity of cost to produce one product verse the other.

Pretend for a moment that you are much better than your best friend at chopping pineapples and at waxing surfboards for tourists. Economically speaking, you are said to have the absolute advantage over your friend because you are better at both tasks.  An easy way to identify absolute advantage is to see who can produce the most of a good or who can do it in the fastest time as we see in this example.  Absolute advantage is when some individual, group, or country has the ability to produce a product more efficiently than another individual, group, or country.  

Now, say that you and your best friend opened a fruit and surf stand on the local beach. There are two tasks that need to be completed: waxing surfboards for the surfers who stop by and chopping pineapples for a refreshing snack for people at the beach. While you might be better at both jobs, you can still get the work done quicker if you each take on one of the tasks. The question is: who waxes the boards and who chops up the pineapples? Let’s say:

Comparative advantage in economics is when a country can produce a good at a lower opportunity cost relative to other producers. It is because of this theory that output will increase because a producers within a country specializes Countries will gain the ability to maximize their efficiency and their labor force which facilitates mass-production of products, resulting in higher profits and international trade. This is because the economies of scale reduces overall cost, by producing more units. If the two countries moved towards protectionism and attempted to become self-sufficient then the production of goods would then

US and Canada can both grow wheat and can do mining. Use the following table to look for which country has a comparative advantage in mining. (HINT: Find the cost of mining in terms of wheat in each country.)

Absolute advantage is when a country produces more of a certain good and less of another good using the same amount of resources. Countries that practice this method are able to take advantage of an economic opportunity that allows them to work more efficiently. For example if two countries agree to import/export for maximum output it creates an absolute advantage to both parties. The U.S can produce more wheat than China, and China can turn around and produce more electronics than the U.S. This occurs because electronic products are cheaper and are now manufactured in China. The factories are bigger and work faster in terms of demand than those in the U.S. There are countries with environmental limitations and are not able to produce crops,

Comparative advantage states that the division of labor should operate freely, without outside interference, because some countries, people, states, etc., have special advantages over the others, that allows them to produce certain goods more

Comparative and Absolute advantages: Comparative advantage is the ability to make or produce something at a lower opportunity cost. Opportunity cost is something that we do every single day in the way we live our lives. This is giving up something for something else. If you wanted to buy some new sports gear for your man cave it may cost $100, but if you only make $50 a week. You unfortunately would have to give up spending any of your money for two whole weeks to buy some of this new swag.

are looked at in form of persons rather than just artificial entities. Therefore, giving them the power to possess rights and responsibilities.

A country is said to be more productive than another country, if it can produce more output (goods) for a given quantity of input, such as labour or energy inputs. An example is that there are only two countries, Australia and Japan. They both produce computers and wine, and only one factor of production, labour. Japan produces 6 computers for every 1 bottle of wine, where as Australia produces only 4 computers for every 3 bottles of wine. This suggests that Australia should export some of its wine to Japan, and Japan should export some of its computers to Australia. Australia has an absolute advantage over Japan, when producing wine, and Japan has an absolute advantage over Australia, when producing computers (Gandolfo, 1998).

The theory of comparative advantage implies the importance of trading for other goods with countries that specialize in the producing those goods in areas that are more efficient so that countries can utilize the majority of its resources to gain an absolute advantage. Logitech has benefitted by diversifying its global operations to different countries based on operational and strategic decisions to remain competitive and innovative in the computer industry.