Comparative advantage is a term used to define the ‘advantage’ that a country has over the others in terms of its efficacy in producing a particular product, and Thailand definitely has a comparative advantage when referred to rice crops, as visible from the fact that despite being the 6th largest producer, it is …
What is a country comparative advantage?
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 suggests that countries will engage in trade with one another, exporting the goods that they have a relative advantage in.
What is my comparative advantage?
A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else. Having a comparative advantage is not the same as being the best at something. In fact, someone can be completely unskilled at doing something, yet still have a comparative advantage at doing it!
What is Italy comparative advantage?
Italy is considered to be moderately inclined towards R&D and innovation but has a strong comparative advantage with respect to the garment, textiles and the fashion industries.
How do you know who has comparative advantage?
To calculate comparative advantage, find the opportunity cost of producing one barrel of oil in both countries. The country with the lowest opportunity cost has the comparative advantage.
What are the four main sources of comparative advantage?
Comparative advantage is determined by a country’s resources, that is the land, labour, capital and enterprise.
What is the best example of specialization?
When an economy can specialize in production, it benefits from international trade. If, for example, a country can produce bananas at a lower cost than oranges, it can choose to specialize and dedicate all its resources to the production of bananas, using some of them to trade for oranges.
What is the law of comparative cost advantage?
The law of comparative advantage describes how, under free trade, an agent will produce more of and consume less of a good for which they have a comparative advantage. … Instead, one must compare the opportunity costs of producing goods across countries).