•Give an example of when you have an absolute but not a comparative advantage.
When a producer can be able to produce a product more in quantity than the competitor by using same amount of resources is called absolute advantage. The country which have less opportunity cost of production of product than its competitor is called competitive advantage.
A country X can produce 10 cars or 20 Bikes. Country Y can produce either 25 cars or 75 bikes
Here Country Y has an absolute advantage in production of cars and Country X has an absolute advantage in production of Bikes
Opportunity cost of Country X in Cars = 2 Bikes/ Car
Opportunity cost of country X in bikes = (1/2) Cars/ Bike
Similarly country Y in Cars = 3 Bikes / Car
In Bikes = (1/3) Cars / Bike
Country Y has comparative advantage in Bikes and Country X in Cars.
•Give an example of when you have an absolute but not a comparative advantage.
Define absolute and comparative advantages. Give an example in which one person has an absolute advantage in doing something but another person has a comparative advantage.
1. Absolute advantage and comparative advantage A AaB Suppose you have the following information on the marginal product of labor in rice production and apparel production in Japan and Thailand: Marginal Product of Labor Thailand Rice (bushels per hour) Apparel (units per hour) Complete the following table by computing opportunity costs of each good in terms of units of another good for both countries: Japan Thailand Opportunity cost of rice (units of apparel per bushel) Opportunity cost of apparel (bushels...
Explain how absolute advantage differs from comparative advantage. (4 marks)
How do you calculate absolute and comparative advantage
QUESTION 1 Provide a real example of "comparative advantage." Explain the example making a clear distinction between the absolute advantage and the "comparative advantage. First, demonstrate the absolute advantage, second, demonstrate the comparative advantage, then, the comparison between them.
The following are correct statements about Comparative and Absolute Advantage, EXCEPT: a) Absolute Advantage means being able to produce more with the same economic resources. b) Comparative Advantage means being able to produce with the lowest opportunity cost. c) Absolute Advantage does not imply Comparative Advantage. d) Efficiency and Optimality can be attained if we specialize and trade according to our Absolute Advantages. (The answer is not C)
What are comparative and absolute advantage? Why is comparative advantage, in your opinion, relevant for international trade?
What does the term "absolute advantage" mean? What is the “principle of comparative advantage”? Explain why the principle of comparative advantage is relevant to international trade policy. Is everyone better off when trading is allowed?
9. Comparative advantage is defined in terms of: efficiency. absolute advantage. opportunity cost. specialization. 10. David can wash four cars in one hour or cut two lawns. Ralph can wash three cars in one hour or cut two lawns. David's opportunity cost for cutting one lawn is car washes, and Ralph's opportunity cost for cutting one lawn is car washes. a. 2; 1.5 4; 3.5 1.5; 2 d. 3.5; 4 11. Gains from trade are based on rather than: opportunity...
2. Use the following table to determine the absolute advantage and comparative advantage of China and the United States in producing wheat and textiles. Explain your answers.