Comparative and absolute advantage (1 Viewer)
- Thread starter BunJai
- Start date
This is hard to explain with english, i like the maths side of it better
let me try then:
absolute advantage is when one country (X) produces more of say CARS than country (Y) using the same amount of resources (labour). I dont mean same amount of metal.
In reality ofcos both X and Y dont only produce cars so they say produce COMPUTERS. Then without trade X decides to devote 1/2 of their labour to produce Cars and the other 1/2 to produce Comps the result is 50 comp and 25 cars.
Y devote the same amount of labour as X and produces 40 comps and 30 cars. using maths for X to produce 1 car the opportunity cost (oc) is not producing 2 comp for Y to produce 1 car is not producing 1.33 comp. Therefore it means that Y will be more comparatively advantaged to produce cars.
hope that helps with the theory
i can explain further if u want to
let me try then:
absolute advantage is when one country (X) produces more of say CARS than country (Y) using the same amount of resources (labour). I dont mean same amount of metal.
In reality ofcos both X and Y dont only produce cars so they say produce COMPUTERS. Then without trade X decides to devote 1/2 of their labour to produce Cars and the other 1/2 to produce Comps the result is 50 comp and 25 cars.
Y devote the same amount of labour as X and produces 40 comps and 30 cars. using maths for X to produce 1 car the opportunity cost (oc) is not producing 2 comp for Y to produce 1 car is not producing 1.33 comp. Therefore it means that Y will be more comparatively advantaged to produce cars.
hope that helps with the theory
i can explain further if u want to
actually i have just looked at my economics book "Updated Economics" and it seems that there is a slight problem to my explanation or there is problem with the book.
If anyone has it please explain this:
for the absolute advantage principle the example uses the idea that the worker produces 100wool and 150shoes but for the comparative principle it says it either produce 100wool or 150 shoe.
im confused
but BunJai the thing i described before is all u need
try to learn how to do the calculations the most this will only appear in a multiple choice question
know how to determine which one is more comparatively advantaged (ie o/c)
If anyone has it please explain this:
for the absolute advantage principle the example uses the idea that the worker produces 100wool and 150shoes but for the comparative principle it says it either produce 100wool or 150 shoe.
im confused
but BunJai the thing i described before is all u need
try to learn how to do the calculations the most this will only appear in a multiple choice question
know how to determine which one is more comparatively advantaged (ie o/c)
-=«MÄLÅÇhïtÊ»=-
Gender: MALE!!!
"for the absolute advantage principle the example uses the idea that the worker produces 100wool and 150shoes but for the comparative principle it says it either produce 100wool or 150 shoe. "
I dont know the source, but it seems correct to me.
If you have absolute advantage, then u are more efficient in both the production of 100 wool and 150 shoes. Whereas in comparative advantage, there is an opportunity cost in which one you choose to produce. Your advantage over person B in wool may be higher than your advantage in shoes. Therefore you produce wool.
I dont know the source, but it seems correct to me.
If you have absolute advantage, then u are more efficient in both the production of 100 wool and 150 shoes. Whereas in comparative advantage, there is an opportunity cost in which one you choose to produce. Your advantage over person B in wool may be higher than your advantage in shoes. Therefore you produce wool.
Alex
Member
GUYS, STOP NOW. ABSOLUTE AND COMPARATIVE ADVANTAGE CANNOT BE TESTED IN THE HSC!!!!!!!!!!!!!!!!!
Have a look in the syllabus and tell me if you can find comparative or absolute advantage ANYWHERE!!!!! You are wasting your time
Have a look in the syllabus and tell me if you can find comparative or absolute advantage ANYWHERE!!!!! You are wasting your time
-=«MÄLÅÇhïtÊ»=-
Gender: MALE!!!
lots of things r not in the syllabus
its wat separates the sheep from the goats...or sumfin like dat
its not a complex concept anyway...dont need to "study" it...
its wat separates the sheep from the goats...or sumfin like dat
its not a complex concept anyway...dont need to "study" it...
p00_p00
Member
It is in last years Catholic trial so dont neglect it guyz!Originally posted by Alex
GUYS, STOP NOW. ABSOLUTE AND COMPARATIVE ADVANTAGE CANNOT BE TESTED IN THE HSC!!!!!!!!!!!!!!!!!
Have a look in the syllabus and tell me if you can find comparative or absolute advantage ANYWHERE!!!!! You are wasting your time
the great one
Member
- Joined
- Aug 5, 2002
- Messages
- 40
its pretty easy anyway. You can use it in an essay for globalisation to argue that free trade will rerdistribute resources to the most efficient country.
hmm Alex has a point
it wasnt asked in last yr's HSC exam...
but its like ALWAYS in trial exams!
and its always nice to talk bout comparative advantage in protection and microreform essays, as 'the great one' said
it wasnt asked in last yr's HSC exam...
but its like ALWAYS in trial exams!
and its always nice to talk bout comparative advantage in protection and microreform essays, as 'the great one' said
Alex
Member
There might be cases where you they can ask you it in the trial, but if you wanna be a real bum you can argue it and probably get the marks counted if you get wrong (if you argue well enough).