Question
Can you explain what the following paragraph ultimately means? A nation which has can produce at a lower cost when measured in terms of opportunity
Can you explain what the following paragraph ultimately means?
"A nation which has can produce at a lower cost when measured in terms of opportunity cost is said to have a comparative advantage. Even though the US has an absolute advantage in needing fewer workers to produce a given quantity of either shoes or refrigerators. Mexico has a comparative advantage in production of shoes and the US has a comparative advantage in the production of refrigerators. Comparative advantage identifies the idea where producers absolute advantage is relatively greatest, or where the producers absolute disadvantage in productivity is relatively least. The US can produce 1000 shoes with 4/5 as many workers as Mexico four versus five, but produce 1000 refrigerators with only 1/4 as many workers one versus four. Thus, the comparative advantage of the US, it's absolute productivity advantage is relatively greatest, lies with refrigerators, and Mexico is comparative advantage, or it's absolute productivity disadvantage is least, is in the production of shoes."
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