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.
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.
Absolute advantage refers to the ability of a country to produce a good more efficiently than other countries. In other words, a country that has an absolute advantage can produce a good with lower marginal cost (fewer materials, cheaper materials, in less time, with fewer workers, with cheaper workers, etc.).
Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. The theory of comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production.
A country has comparative advantage in the production of a good if it can produce that good at a lower opportunity cost relative to another country.
Which of the following best describes the application of comparative advantage? Development focused on maximizing economic efficiency and well-being by focusing resources to produce whatever the country can produce relatively well compared to other countries and exports them in exchange for goods it does not produce.
comparative advantage, economic theory, first developed by 19th-century British economist David Ricardo, that attributed the cause and benefits of international trade to the differences in the relative opportunity costs (costs in terms of other goods given up) of producing the same commodities among countries.
A country is said to have a comparative advantage if it produces a good or service with the lowest opportunity cost. Opportunity cost in a comparative advantage context is what is the loss of one good when producing the other.
Canada has a comparative advantage in the production of wheat because she has a lower opportunity cost in the production of wheat.
Comparative advantage is what you do best while also giving up the least. For example, if you're a great plumber and a great babysitter, your comparative advantage is plumbing.
According to opportunity costs, should specialize in seafood. How can the law of comparative advantage be applied to Country A and Country B? (D)Country A should produce petroleum, and Country B should produce seafood. Without specializing, the total output for both countries after two days would be 48.
Explain how the theory of comparative advantage relates to the need for internationalbusiness. ANSWER: The theory of comparative advantage implies that countries should specialize inproduction, thereby relying on other countries for some products. Consequently, there is a need forinternational business.