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Comparative and Absolute Advantage

In: Business and Management

Submitted By jan51993
Words 4210
Pages 17
Comparative and Absolute Advantage
ECO 561
Alfred Igbodipe
7/24/16

Introduction
Due to the differences between the countries in its profitable fundamentals; the International Trade occurs. The contracts between the countries consider as the primary driver of the global exchange. These contracts concluded on the basis of the countries beneficial elements and advantages. Each international trade between the countries depends on numerous focal points of this exchange process. The economics and producers effectiveness measured by absolute advantage for these economics/producers. For example; if the producer needs lesser amount of contributions/inputs to provide specific product, then this producer has an absolute advantage in producing process. Comparative advantage discusses the economy/producer ability to produce a specific product with a minimum opportunity cost comparing to another producer. "There is a possibility of each nation to have an absolute advantage in producing and delivering the products; however; the different nations could in any case have distinctive comparative advantages". The international trade theory based on two dynamic concepts; "Absolute and comparative advantage". The main difference between these concepts is that the absolute advantage measure nation ability to produce more profits per unit of beneficial input than another. However; the comparative advantage measure the ability that one nation has an absolute advantage in each kind of produce.
Analyze measures of economic growth, and comparative and absolute advantage in international trade for the following countries:
USA
The economic growth indicates that the U.S economy has expanded by an annual 1.1 percent in the first quarter of 2016 which is higher than the projections of 0.8 percent. Based on the data given by the Bureau of Economic analysis, the positive economic growth...

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