Principle of Comparative Advantage

Question 1

what is comparative advantage

Answer 1

capability to produce the specific goods at lower opportunity cost

Question 2

when is a country efficient

Answer 2

if domestic price of producing goods is less than world price there is lower op cost and comaprative advantage

Question 3

draw the “gains from exports” graph

Answer 3

label everything

Question 4

what does the comparative advantage ds model determine

Answer 4

the relative price of a good which is the same thing as op cost

Question 5

draw the gains from imports graph

Answer 5

label everything

Question 6

how dyou producers benefit from exports

Answer 6

higher productions and prcie

Question 7

how do consumers benefit from exports

Answer 7

lose less quantity higher price

Question 8

what determines the sources of CA

Answer 8

the quality and quantity of the nation’s resources (human, natural, capital) and tech processes

Question 9

how do natural resources determined with aus and middle east example

Answer 9

based on differences in climate and enowment of natural resources
aus –> vast land and rocks = iron ore, coal
middle east –> dessery = oil supplies

Question 10

how do labour and capital resources with us and jap

Answer 10

large work force
jap - motor vehicles, electronics
US - actors, computer, electronics