Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Do you agree or disagree with the following paragraph and why? Absolute advantage refers to a country's ability to produce a good or service more

Do you agree or disagree with the following paragraph and why?

Absolute advantage refers to a country's ability to produce a good or service more efficiently and at a lower cost than another country. It is true that some countries may have certain disadvantages, such as poor soil, low investments in education, lack of capital, or limited natural resources. However, absolute advantage is not the only factor that determines a country's ability to benefit from trade. One important concept to consider is comparative advantage. Comparative advantage is the ability of a country to produce a good or service at a lower opportunity cost than another country. It takes into account the relative efficiency of production rather than focusing solely on absolute efficiency. Even if a country does not have an absolute advantage in any particular industry, it can still benefit from trade by specializing in the production of goods or services in which it has a comparative advantage. In the case of Malawi, while it may face challenges in terms of poor soil, low investments in education, and limited natural resources, it does not mean that the country cannot benefit from trade. Malawi, for example, may have a comparative advantage in the production of certain agricultural products due to its climate or labor force. By focusing on these areas of comparative advantage and trading with other countries, Malawi can benefit from the exchange of goods and services. Trade allows countries to specialize in the production of goods and services that they can produce most efficiently, while importing goods and services that other countries can produce more efficiently. This leads to increased productivity, economic growth, and higher standards of living for all participating countries. By engaging in trade, even countries with limited resources or disadvantages can access a wider range of goods and services, fostering economic development and improving the well-being of their citizens. It's also important to note that trade can provide opportunities for countries to acquire resources and technology from other nations. Through trade, countries can gain access to capital, technology, and knowledge that can help overcome some of the challenges they face. This can lead to improvements in productivity, innovation, and overall economic performance. In conclusion, while it is true that some countries may face challenges and not have absolute advantages in certain industries, they can still benefit from trade by focusing on their comparative advantages.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Macroeconomics

Authors: N Gregory Mankiw

7th Edition

1285165918, 9781285165912

More Books

Students also viewed these Economics questions

Question

What is the chemical formula of dolomite?

Answered: 1 week ago

Question

what is a feasibility study? explain briefly

Answered: 1 week ago

Question

1. Avoid conflicts in the relationship

Answered: 1 week ago

Question

1. What will happen in the future

Answered: 1 week ago