Would you rather have a comparative or absolute advantage?
If you were President of the US and you were making decisions on trading, would you rather have a comparative or absolute advantage in trading? Can you have both a comparative and absolute advantage in trading? If so, what if at all would be the benefit for your country to trade with any other country?
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I would rather have a comparative advantage. If my country has a comparative advantage in a good, it means that my country can produce the good at a lower opportunity cost than its trading partner. If my country has an absolute advantage in a good, it means that my country can produce the good using ...
Solution Summary
This solution explains a fundmental concept in international trade: absolute and comparative advantage. It presents a case study to show how a developed country can benefit from trade with a developing country.
Comparative vs Absolute economic advantage
analysis of the international economy
Discuss reasons why the economic growth of the four countries varies so markedly. How does trade influence the strength of the economy worldwide?
The 4 countries are:
USA
China
Saudi Arabia
Democratic Republic of Congo