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· Identify an example of absolute advantage relative to the

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Gabriela Louise

on 24 November 2014

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Transcript of · Identify an example of absolute advantage relative to the

Gabriela Hajaistron
5.04 Trade Analysis
It takes the United States workers 4 hours to produce one unit of citrus, but it takes the other countries 6 hours or more. That said, The U.S. has a comparative advantage over the other countries, if we are looking at the hour aspect.
Identify an example of comparative advantage relative to the United States from your data tables. Be sure to identify which country has comparative advantage (U.S. or other), the product, and data to support your claim.
Explain why most trade occurs because of comparative advantage. Be sure to provide examples from the data tables or from the lesson to support your answer.
Identify an example of absolute advantage relative to the United States from your data tables. Be sure to identify which country has absolute advantage (U.S. or other), the product, and data to support your claim. Tip: When considering absolute and comparative advantage, worker hours to produce one unit is a reflection of productivity.
The chart that was in the lesson earlier tells me that it takes a shorter amount of time for the production of corn, citrus , apparel and computer software in the United states than in other countries. Knowing that and knowing that absolute advantage is when a country requires less physical resources than others to produce a product, The United states has an absolute advantage.

Well a comparative advantage is basically a person or a country's ability to produce a good or service at a lower marginal and opportunity cost. If one country is more efficient in any particular production of goods, then every country trading with each other benefit.

Corn Citrus Number of additional worker
hours to produce one unit of
citrus instead of one unit of corn
United States 2 8 2
Developing Country 6 10 4
Developed Country 8 10 2
Apparel Computer Software Number of additional worker
hours to produce one unit of
computer software instead of apparel
United States 2 4 2
Developing Country 4 12 8
Developed Country 6 8 2
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