Asked Nov 21, 2019

How is comparative advantage related to early American production?


Expert Answer

Step 1

A country has a comparative advantage at producing something if the country can produce it at lower cost than other country.

According to an Economist, “comparative advantage” is the idea that both parties can benefit from trade even if one of them is better at producing everything than the other.

Step 2

From the trade trends of the U.S., it appears that the United States has a growing comparative trade advantage in capital goods and chemicals. Since the early 1960s at latest the United States has been a net exporter of capital goods and chemicals, this pattern of trade...

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