Will a nation import or export a good in which it has a comparative advantage and why?
Countries should import goods if the opportunity cost of importing is lower than the cost of producing them locally. Specialization according to comparative advantage results in a more efficient allocation of world resources. A larger quantity of outputs becomes available to the trading nations.Click to see full answer. Correspondingly, will a country do better importing…
Countries should import goods if the opportunity cost of importing is lower than the cost of producing them locally. Specialization according to comparative advantage results in a more efficient allocation of world resources. A larger quantity of outputs becomes available to the trading nations.Click to see full answer. Correspondingly, will a country do better importing or exporting a good for which it has a comparative advantage?A country will do better exporting a good for which it has a comparative advantage. Traders will compete with one another, giving countries greater and greater amounts of the gains from trade to gain their business.Likewise, why do countries export goods in which they have comparative advantage? It is being able to produce goods by using fewer resources, at a lower opportunity cost, that gives countries a comparative advantage. The gradient of a PPF reflects the opportunity cost of production. Increasing the production of one good means that less of another can be produced. Hereof, what products the USA has a comparative advantage? The United States has a revealed comparative advantage in exporting capital goods, chemicals, miscellaneous goods, plastics, rubber and transportation.When a country has a comparative advantage?When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods.
