The difference between comparative advantage and absolute advantage .

Question

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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.

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Students have asked these similar questions

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.

The two countries decide to trade with each other, which allows them to be able to specialize in the good in which they have a comparative advantage. , Derryland should specialize in the production of Group of answer choices cheese and Whetonia should specialize in the production of bread. bread and Whetonia should specialize in the production of cheese. both goods and Whetonia should specialize in the production of neither good. neither good and Whetonia should specialize in the production of both goods.

Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude: Question 48 options: Canada has a comparative advantage in the production of hockey sticks. Germany has a comparative advantage in the production of hockey sticks. Canada has an absolute advantage in the production of maple syrup. Germany has an absolute advantage in the production of maple syrup.

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.

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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.

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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.

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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.