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What comparative advantage does the US have?

What comparative advantage does the US have?

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 is an example of a 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.

What comparative advantage does the US have over Mexico?

The United States has an absolute advantage in producing 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. Absolute advantage simply compares the productivity of a worker between countries.

Does the US have absolute advantage or comparative advantage?

In Table 1, Saudi Arabia has an absolute advantage in the production of oil because it only takes an hour to produce a barrel of oil compared to two hours in the United States….A Numerical Example of Absolute and Comparative Advantage.

Country Oil (hours per barrel) Corn (hours per bushel)
United States 2 1

What does the United States have a comparative advantage in?

A comparative advantage is when one party has the capability to produce a good more efficiently than another party does. As an example, the United States has a comparative advantage in producing airplanes, while China has a comparative advantage in producing consumer goods like electronics and appliances.

What are some disadvantages of comparative advantage?

it could create complications for the companies that were relying on

  • Transport cost may outweigh the comparative advantage.
  • Increased specialization may make scaling difficult.
  • What companies have comparative advantage?

    Amazon (AMZN) is an example of a company focused on building and maintaining a comparative advantage. The e-commerce platform has a level of scale and efficiency that is difficult for retail competitors to replicate, allowing it to rise to prominence largely through price competition.

    What are the assumptions of comparative advantage?

    Assumptions of Comparative Advantage. The following are the assumptions of the Ricardian doctrine of comparative advantage: There are only two countries, assume A and B. Both of them produce the same two commodities, X and Y. Labour is the only factor of production. The supply of labour is unchanged. All labour units are homogeneous.