Does any country have an absolute advantage in any product(s)? Specialization is also used to describe the occurrence when a country shifts resources to focus on producing a good that offers comparative advantage.) These goods are homogeneous, meaning that consumers/producers cannot differentiate between corn or oil from either country. It has a very stable currency. comparative advantage Processed food, fresh food, basic manufacturing, wood products, leather products, transport products, and textiles. 1.3 How Economists Use Theories and Models to Understand Economic Issues, 1.4 How Economies Can Be Organized: An Overview of Economic Systems, Introduction to Choice in a World of Scarcity, 2.1 How Individuals Make Choices Based on Their Budget Constraint, 2.2 The Production Possibilities Frontier and Social Choices, 2.3 Confronting Objections to the Economic Approach, 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services, 3.2 Shifts in Demand and Supply for Goods and Services, 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process, Introduction to Labor and Financial Markets, 4.1 Demand and Supply at Work in Labor Markets, 4.2 Demand and Supply in Financial Markets, 4.3 The Market System as an Efficient Mechanism for Information, 5.1 Price Elasticity of Demand and Price Elasticity of Supply, 5.2 Polar Cases of Elasticity and Constant Elasticity, 6.2 How Changes in Income and Prices Affect Consumption Choices, 6.4 Intertemporal Choices in Financial Capital Markets, Introduction to Cost and Industry Structure, 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit, 7.2 The Structure of Costs in the Short Run, 7.3 The Structure of Costs in the Long Run, 8.1 Perfect Competition and Why It Matters, 8.2 How Perfectly Competitive Firms Make Output Decisions, 8.3 Entry and Exit Decisions in the Long Run, 8.4 Efficiency in Perfectly Competitive Markets, 9.1 How Monopolies Form: Barriers to Entry, 9.2 How a Profit-Maximizing Monopoly Chooses Output and Price, Chapter 10. Absolute Versus Comparative Advantage. 1 Approved Answer. Review the numbers for Canada and Venezuela from Table 13 which describes how many barrels of oil and tons of lumber the workers can produce. Which career should you pursue? 2. The United States can produce 100 bushels of corn or 50 barrels of oil. If Brazil has a comparative advantage in the production of coffee compared to the United States, then A) Brazil can produce coffee at a lower opportunity cost than the United States. This means the opportunity cost of producing a ton of copper is 2 bushels of corn. How do we quantify the cost in terms of other goods? When it comes to importing raw materials from Brazil, the United States already has zero or low tariff rates in most categories, but there are some products where demand is high, but tariffs remain, creating opportunities for savings for U.S. consumers. Absolute advantage, economic concept that is used to refer to a party’s superior production capability. False. Brazil has both a comparative advantage and an absolute advantage in sugar cane production. Under what conditions does comparative advantage lead to gains from trade? Simplify the problem and assume that Zambia just needs labor to produce copper and corn. Saudi Arabia can produce 100 barrels of oil or 25 bushels of corn. Ans: e Unit labor Country requirements Austria Belgium Steel 3 8 Brooms 2 1 . Low … Consider a hypothetical world with two countries, Saudi Arabia and the United States, and two products, oil and corn. Thanks for ask to answer. Brazil has traditionally been more export-oriented than most other Latin American countries on account of its size, comparative advantage stemming from production of primary goods and, in … Poverty and Economic Inequality, Introduction to Poverty and Economic Inequality, 14.4 Income Inequality: Measurement and Causes, 14.5 Government Policies to Reduce Income Inequality, Chapter 15. Clearly, to gain from trade it needs to be able to gain more than a half barrel of oil for its bushel of corn—or why trade at all? There is only one resource available in both countries, labor hours. Which country has the absolute advantage in beef? The underlying reason why trade benefits both sides is rooted in the concept of opportunity cost, as the following Clear It Up feature explains. For the United States, the opportunity cost of producing one barrel of oil is two bushels of corn. e. All of the above. Specialization refers to a country’s decision to specialize in the production of a certain good or list of goods because of the advantages it possesses in their production. In this example, does each country have an absolute advantage and a comparative advantage in the same good? Without trade, specialization is impractical. KANDREGULA R answered on April 03, 2020. Recently, the international dairy market has growing substantially and Brazil has exported more dairy products. 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