Which country has the comparative advantage in TV? China has the comparative advantage because its opportunity cost (2 TVs per shirt) is less than India’s (4 TVs per shirt). Explain why these countries can benefit from trade. Both are able to increase their consumption of TVs and shirts due to trade.
Why does China have a comparative advantage?
China’s trade pattern is influenced not just by its overall comparative advantage in labor intensive goods but also by geography. The model predicts that China has a comparative advantage in heavy goods in nearby markets, and lighter goods in more distant markets. …
Who has the comparative advantage in producing televisions?
Thus, the opportunity cost of producing televisions is lower in Poland, so Poland has the comparative advantage in the production of televisions. Note: Do not let the fractions like 3/4 of a camera or 1/2 of a video camera bother you.
Does China have a comparative advantage in manufacturing?
First, the authors found that types of Chinese manufactured products with comparative advantage in both world and US markets are increasing. … Third, as a whole, Chinese manufactured exports are of greater comparative advantage in the world market than in the US market.
Does China have an absolute advantage or comparative advantage over the United States in the production of rice?
The opportunity cost of a pound of rice is 3/2 bananas in China and 2 bananas in the United States. China, therefore, has a comparative advantage in producing rice.
What are China’s advantages?
Advantages. China’s growth has reduced poverty. Only 3.3% of the population lives below the poverty line. 4 China contains about 20% of the world’s population.
Does China have an absolute or comparative advantage?
China and Consumer Electronics: Many consumer electronics are manufactured in China. China can produce such goods more efficiently, which gives it an absolute advantage relative to many countries. Imagine that Economy A can produce 5 widgets per hour with 3 workers.
Which country has a comparative advantage in producing food and which country has a comparative advantage in producing televisions?
Canada has a comparative advantage in producing televisions. The United States has a comparative advantage in producing food.
Which country has the comparative advantage either in the production of TV sets or in the production of cars over the other?
Answer: Singapore has the absolute advantage in the production of both TV set and Cars over Malaysia .
Why does the United States not have an absolute advantage in coffee quizlet?
Why does the United States not have an absolute advantage in coffee? The climate in the United States is not ideal for growing coffee, so countries closer to the equator tend to have a greater absolute advantage.
What comparative advantage does China have over the US?
A contemporary example: China’s comparative advantage with the United States is in the form of cheap labor. Chinese workers produce simple consumer goods at a much lower opportunity cost. The United States’ comparative advantage is in specialized, capital-intensive labor.
How does China benefit from trading?
It supports US jobs. … While expanding foreign trade can disrupt US employment, trade with China also creates and supports a significant number of American jobs. Exports to China support nearly 1 million US jobs, and Chinese companies invested in the United States employ over 120,000 workers.
How does China benefit from international trade?
Another advantage of trade is that it has increased the variety of goods and services available to the Chinese consumers, and at the same time it has also increased the competition level in the local markets.
Why is comparative advantage better than absolute advantage?
Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.
How do countries know when they have a comparative advantage in the production of a good?
Countries have a comparative advantage in production when they can produce a good or service at a lower opportunity cost than other producers. Countries are better off if they specialize in producing the goods for which they have a comparative advantage.
When a country has a comparative advantage in the production of a good?
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.