Examples of comparative advantage in the real world
What is an example of comparative advantage in the global economy today?
A contemporary example: China’s comparative advantage with the United States is in the form of cheap labor. Chinese workers produce simple consumer goods at a much lower opportunity cost. The United States’ comparative advantage is in specialized, capital-intensive labor.
Where does the US have a comparative advantage?
Because the market is so well developed, the United States has a comparative advantage in government-backed financial instruments and hence exports them to in- vestors around the world (table 3.1).
Which of the following is the best example of comparative advantage?
Which of the following is the best example of comparative advantage? Meissen, Germany produces porcelain better than they manufacture vehicles. A country with more textiles has a comparative advantage over a country with more wine.
What is China’s comparative advantage?
China’s comparative advantage is manufacturing, and there’s no shortage of policies that support this, from forced labor and the lack of IP protection to the coddling of state-owned companies.
What is America’s competitive advantage?
In the renewed environment of great power competition, the United States has a distinct competitive advantage: its alliance and partner network. Strengthening those alliances and partnerships remains a cornerstone of the United States’ national security strategy.
Which country has the comparative advantage in bananas?
Ecuador has a comparative advantage in bananas over a long list of countries, including the United States.
What is the UK’s comparative advantage?
The UK is a particularly successful exporter of services – with a strong comparative advantage in a range of sectors, including financial services, business and professional services, IT and communications, design and media, and travel and tourism.
What country has a comparative advantage?
For example Ireland has a comparative advantage in cheese and butter due to climate and a large amount of land suitable for dairy cows. China has a comparative advantage in electronics because it has an abundance of labor.
What is comparative advantage provide an example?
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.
Does the US have an absolute advantage or comparative advantage?
Even though the United States has an absolute advantage in producing both refrigerators and shoes, it makes economic sense for it to specialize in the good for which it has a comparative advantage.
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Mutually Beneficial Trade with Comparative Advantage.
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Mutually Beneficial Trade with Comparative Advantage.
| Country | Shoe Production | Refrigerator Production |
|---|---|---|
| Total | 9,500 | 28,500 |
Does the US have a comparative advantage in agriculture?
Tariffs, border taxes, and other trade-restricting policies distort cost structures and thus, distort comparative advantages and trade flows. In the case of agriculture, the United States has a comparative advantage.
What products does the United States have absolute advantage?
The United States has an absolute advantage in producing both shoes and refrigerators; that is, it takes fewer workers in the United States than in Mexico to produce both a given number of shoes and a given number of refrigerators. Absolute advantage simply compares the productivity of a worker between countries.
Which country has the comparative advantage in oil production?
Because Saudi Arabia produces oil very cheaply, it holds a comparative advantage in oil, and it exports oil in order to finance its purchases of imports.
Who has comparative advantage in corn?
The United States
The United States gives up the least to produce a bushel of corn, so it has a comparative advantage in corn production.
What would happen if China and US stopped trading?
If the U.S. is forced to sell half of its direct investments in China, that would cost American investors $25 billion a year in capital gains and up to $500 billion in GDP losses, the report said. U.S. businesses risk losing global competitiveness if sweeping policies force separation from China, the report said.
What would happen if the United States lost its comparative advantage in producing soybeans?
If US loses its comparative advantage in producing soybean that implies its opportunity cost of producing soyabean will increase. Thus it to keep the optimal level of soyabean production maintianed at the international level, US will have to give up soyabean production and become an importer of this product.
Who has the comparative advantage in producing potatoes?
The farmer
The farmer has a comparative advantage in producing potatoes, since his opportunity cost (1/4) is smaller than the rancher’s opportunity cost (1/2).
What is comparative advantage discuss by giving an example?
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.
Which country has comparative cost advantage in growing potatoes?
If we now look to the production of potatoes, China has an opportunity cost of 0.5. In other words, it must sacrifice 0.5 wheat. At the same time, India has an opportunity cost of 0.8. So when we look at the nation with the lower opportunity cost, it would be China that has the comparative advantage.
Which country has the comparative advantage in beef?
Canada
The country which has a comparative advantage in beef production is Canada since its opportunity cost of producing beef is thrice that of producing computers.
Which manufacturing company has the comparative advantage for car parts?
This means Volkswagon has the comparative advantage in car parts. This means that when possible, Rolls Royce should specialize in the production of aircraft parts, since they have lower opportunity cost of producing them.