Explanation Comparative advantage results from different donations from production factors, power assets, enterprising skills and innovations. Additionally trade with no tariff is useful for all the countries as they can gain profits if they specialize as per its comparative advantage. Comparative advantage can be defined as when a country can manufacture goods at reduced opportunity cost but does not have an absolute advantage in it. We can determine the comparative advantage of two workers performing the same task if one of them can complete the given task at a reduced cost than the other...

Principles of Economics (Second Edition)

2nd Edition

ISBN: 9780393614077

Author: coppock, Lee; Mateer, Dirk

Publisher: W. W. Norton & Company

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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 6QFR

To determine

The criteria used to determine the comparative advantage of two workers performing a particular task

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Chapter 2 Solutions

Principles of Economics (Second Edition)

Ch. 2 - Prob. 1QFR Ch. 2 - Prob. 2QFR Ch. 2 - Prob. 3QFR Ch. 2 - Prob. 4QFR Ch. 2 - Prob. 5QFR Ch. 2 - Prob. 6QFR Ch. 2 - Prob. 7QFR Ch. 2 - Prob. 8QFR

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Can a nations comparative advantage change over time? What factors would make it change?

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