Canada has the comparative advantage in producing cell phones. If it seems counterintuitive that Koreans should import cell phones from Canada even though they can produce more cell phones per hour of work, think about the opportunity cost to each country of producing each good.
Does Canada have an absolute or comparative advantage?
The Canadian economy has an absolute advantage in agricultural goods relative to most other countries globally. This because land is relatively abundant in Canada, as well as low cost.
What is Canada’s absolute advantage?
Absolute advantage & Comparative advantage
Canada has an absolute advantage in agricultural production and mining activities due to low cost land. Due to availability of vast land and natural resources Canada also has absolute advantage on gold and crude oil.
How does Canada benefit from trade?
Both exports and imports are beneficial to economic growth, largely by boosting productivity. Firms in Canada that export have significantly higher productivity than firms that do not export. Imports of intermediate inputs contributed over half of Canada’s recent productivity growth.
What countries have comparative advantage?
For example Ireland has a comparative advantage in cheese and butter due to climate and a large amount of land suitable for dairy cows. China has a comparative advantage in electronics because it has an abundance of labor.
What is Mexico’s comparative advantage?
Mexico’s major comparative advantage remains climate, the ability to produce fresh fruits and vegetables when US farmers except in Florida are not producing.
What does Colombia have a comparative advantage in?
Analysis shows that Colombia has comparative advantages in apparel relative to the rest of the world (comparative advantage index of 1.9). Analysis shows that textiles and apparel have competitive positions in the US market (Relative Commercial balance above 0.8, Specialization index above 0.1).
What is an example of comparative advantage?
Comparative advantage is what you do best while also giving up the least. For example, if you’re a great plumber and a great babysitter, your comparative advantage is plumbing. That’s because you’ll make more money as a plumber.
Which country or countries have an absolute advantage and comparative advantage in shoes?
Production Possibilities and Comparative Advantage
The United States has an absolute advantage in productivity with regard to both shoes and refrigerators; that is, it takes fewer workers in the United States than in Mexico to produce both a given number of shoes and a given number of refrigerators.
Which country has the comparative advantage in producing grain?
The United States has a comparative advantage in producing grain, since it has a lower opportunity cost in terms of cars given up.
How does Canada benefit from free trade?
Benefits of Canada’s FTAs
Economic Boost – FTAs eliminate tariffs imposed on most Canadian exports by other parties to the agreements, which contributes to Canadian export competitiveness and helps improve living standards for Canadians.
How does comparative advantage affect trade between countries?
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 type of government does Canada have?
Since Japan’s opportunity cost is lower, Japan has comparative advantage on fish production and will export fish. The comparative advantage of cloth is found the same way.
What is China’s comparative advantage?
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.
Which country has comparative advantage in pizza?
Italy is better at making pizzas than Germany, so it has an absolute advantage in pizza making.