Define absolute advantage and comparative advantage. Explain how ...

[Alygatorr01285]

Define absolute advantage and comparative advantage. Explain how China has an absolute advantage over the United States and how the United States has a comparative advantage over China.

Question 2

A ____ is issued by a bank upon request of an importer stating that the bank will pay an amount of money to a stated beneficiary.
 A) license
  B) letter of credit
  C) bill of lading
  D) draft
  E) voucher

[akudia]

Answer to Question 1

Absolute advantage occurs when a country can produce more of a good than other nations, using the same amount of resources. China has an absolute advantage over the United States in terms of clothing production. However, in the absence of trade barriers, trade patterns tend to be based on the principle of comparative advantage rather than absolute advantage.
Comparative advantage refers to the ability of a nation to produce a good at a lower opportunity cost than other nations. The United States has a comparative advantage versus most countries in movie and television program production.

Answer to Question 2

B