Question
The concept of comparative advantage. According to the book, when a relative price differential exists between two goods, trade should be considered. More specifically, if
The concept of "comparative advantage."
According to the book, when a relative price differential exists between two goods, trade should be considered. More specifically, if the relative price of good A is lower in country ABC, and if the relative price of good B is lower in country XYZ, then ABC should specialize in the production of A, XYZ should specialize in the production of B, and each country should "trade" its surplus with the other. As you can see, this is a pretty "textbook" explanation. As you probably already know, only a small portion of the population takes graduate-level economics classes, so this is my starter question: How would you explain the idea of comparative advantage to a family or friend who does not study business? Perform an internet search to locate a real-world example, and explain to your peers why that country has a comparative advantage in that good.
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