Chapter 6 macro

What's is the difference between advantage and comparative advantage?

COMPARATIVE advantage is the ability of an individual firm, Or a country to produce a good or service at a lower opportunity cost than competitors. While ABSOLUTE advantage is the ability of an individual, a firm, or a country to produce more of a good or service than competitors when using the same amount of resources. A country will always be an exporter of a good where it has A COMPARATIVE advantage in production.

Among the main sources of comparative advantage are the following

Climate and natural resources,relative abundance of labor and capital, technology, external economies

The table shows the quantity of two goods that a worker can produce per day in a given country. Which of the following is true

Country A has an absolute advantage in the production of both goods and a comparative advantage in the production of food.

Briefly explain whether you agree or disagree with the following statement: "International trade is more important in the U.S. Economy than to most other economies."

Disagree. Exports and imports are a relatively small fraction of the United States GDP

The world is often described as having a global economy. How important is international trade In the United States?

In the U.S., exports are smaller fractions of GDP than in most other countries

Which of the following is not a main source of comparative advantage

Internal economies of scale

Comparative advantage

Is the ability of an individual. A firm, or a country to produce a good or service at a lower opportunity cost than its competitors

Obama was suggesting that a job would be lost if the T-shirt were cheaper because

It would be produced in another country

Do you agree with Obama's statement? Briefly explain.

Producers in industries in which the U.S has a comparative advantage would likely not agree with Obama

Using the economic concept of comparative advantage, explain under what circumstances it would make sense for the United States to produce all of the t-shirts purchased in the u.s. The United States should produce all of the t-shirts purchased in the U.S if the U.S could produce

T-shirts at lower opportunity cost than other countries

What is absolute advantage

The ability of an individual,firm, or country to produce more of a good or service than competitors when using the same amount of resources.

Although international trade leads to substantial net benefit, not every one gains from international trade. Which of the following is most likely to lose from trade

The workers and companies in the industries that compete with the imports.

Which of the following statements is true about the importance of trade in the us economy

While exports and imports have been steadily rising as a fraction of GFP, not all sectors of the u.s economy have been affected equally by international trade