Quick Answer: What Country Has An Absolute Advantage?

Which country has the absolute advantage in bananas?

Puerto RicoPuerto Rico has the absolute advantage in bananas, while Jamaica has the absolute advantage in sugar cane..

Does Canada have an absolute advantage?

For example, if Canada can produce 100 pounds of beef using two ranchers, while Argentina needs three ranchers to produce 100 pounds of beef, Canada has an absolute advantage over Argentina in beef production. Absolute advantage can be the result of a country’s natural endowment.

What does Canada specialize in producing?

Canada is a world leader in the production of many natural resources such as gold, nickel, uranium, diamonds, lead, and in recent years, crude petroleum, which, with the world’s second-largest oil reserves, is taking an increasingly prominent position in natural resources extraction.

What happens if the cost difference is the same in two countries?

If the cost different between two countries are equal or if opportunity cost are same between two different countries then there would be nothing to gain from gaining expertise, the countries are alike and there is no advantage from producing the good overseas rather than at home.

What is absolute cost advantage?

Key Takeaways. Absolute advantage is when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than other producers. Absolute advantage can be the basis for large gains from trade between producers of different goods with different absolute advantages.

How do you find absolute advantage?

Make a table like Table 19.6.To calculate absolute advantage, look at the larger of the numbers for each product. … To calculate comparative advantage, find the opportunity cost of producing one barrel of oil in both countries.More items…

When a country has an absolute advantage?

Absolute advantage and comparative advantage are two concepts in economics and international trade. Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better.

What country has a 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 does America have an absolute advantage in?

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.

Why does the United States not have an absolute advantage in coffee?

Why does the United States not have an absolute advantage in coffee? Other countries have much more favorable climates for growing coffee. not to have an absolute advantage? … For example, the United States both exports and imports cars.

Can two countries have absolute advantage?

It is not possible for a country to have a comparative advantage in all goods. However, a country can have an absolute advantage in all goods. An absolute advantage exists when a country is simply the best (most efficient) in producing a product or service.

Does Germany have an absolute advantage?

A country has an absolute advantage if it can produce something more efficiently than another country. Germany is better than making beers than Italy, so it has an absolute advantage in brewing.

Who has a 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.

Which country has an absolute advantage in producing lumber?

CanadaOne worker in Canada can produce more lumber (40 tons versus 30 tons), so Canada has the absolute advantage in lumber. One worker in Venezuela can produce 60 barrels of oil compared to a worker in Canada who can produce only 20.

What country has an absolute advantage in coffee production?

BrazilAnswer:Brazil has an absolute advantage in coffee:–Producing a pound of coffee requires only one labor-hour in Brazil, but two in Argentina.

What is absolute advantage example?

Absolute advantage refers to the ability of a country to produce a good more efficiently than other countries. … For example, the Canadian economy, which is rich in low cost land, has an absolute advantage in agricultural production relative to some other countries.

What is US comparative advantage?

The United States’ comparative advantage is in specialized, capital-intensive labor. American workers produce sophisticated goods or investment opportunities at lower opportunity costs. Specializing and trading along these lines benefit each.

What are the benefits of absolute advantage?

Achieving an Absolute AdvantageFewer materials are used to produce a product.Cheaper materials (thus a lower cost) are used to produce a product.Fewer hours are needed to produce a product.Cheaper workers are (in terms of hourly wage) used to produce a product.