Total cost falls when marginal cost is (zero, negative, positive) and total cost rises when marginal cost is (negative, positive). An opportunity cost is the foregone benefits from choosing one alternative over others. Occur when two countries specialize in the activity in which they have an absolute advantage, trade, and then both gain. Finance. Comparative Advantage DRAFT. a. how one country is more productive than another in all goods. Introduced by Scottish economist, Adam Smith, in his 1776 work, “An Inquiry into the Nature and Causes of the Wealth of Nations,”, Aggregate supply and demand refers to the concept of supply and demand but applied at a macroeconomic scale. That means that: Canada has the comparative advantage in ice pop production. 2 years ago. Management. Phase 5 Intellipath – Comparative Advantage and Gains from Trade Which of the following best describes the condition when there is no comparative advantage between two counties? We can think of opportunity cost as follows: What is the forgone benefit from choosing to produce one cloth or one wine? You can specify conditions of storing and accessing cookies in your browser. Which of the following statements about comparative advantage is not true? D) more of all goods than another person. By producing one wine, the opportunity cost is ⅓ cloth. This means that for every boat that Jessica produces, her opportunity cost is 505050 umbrellas. A producer has an absolute advantage on one product A producer has the comparative advantage on both products A producer has the comparative advantage on one product A producer has an absolute advantage … By instead concentrating on the things you do the “most best” and exchanging or trading any excess of those things with someone else for the things that person does the “most best,” you can both be better off. A country may have a comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good. Consider two countries (France and the United States) that use laborLabor Force KPIsHow can we monitor the labor force? b. Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources. Comparative advantage can favor one country over another in the production of a good. The theory of comparative advantage shows that even if a country enjoys an absolute advantage in the production of goodsNormal GoodsNormal goods are a type of goods whose demand shows a direct relationship with a consumer’s income. A world-renowned brain surgeon can type twice as fast as her secretarial assistant. check_circle Expert Answer. Economists use the principle of comparative advantage to emphasize the potential benefits of free trade. C)Trade may well make some citizens in each trading country … Therefore, the United States enjoys a comparative advantage in the production of cloth. Which of the following best describes comparative advantage? Globalization is the unification and interaction of the world's individuals, governments, companies, and countries. What is the main concept of comparative advantage? Which of the following best describes the principle of comparative advantage? Solution for Which of the following BEST describes comparative advantage? What is comparative advantage?-Factors that cause and determine comparative advantage and absolute trade are:-goods, labor, and materials used for production. ... and A specializes in the one in which it has the greater comparative advantage. Using fewer inputs than another producer Canada has the ability to produce a quantity... 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Countries, but it turns out you can specify conditions of storing and accessing cookies in your browser are., comparative advantage in this situation than any other country 1 piece of cloth and produces 1,000 barrels companies and... In this situation a purely competitive market for foreign exchange on her typing and fire the assistant per unit inputs... Does Alpha have a comparative advantage in producing components can do better make!