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Comparative Advantage Homework Answers

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Comparative Advantage Assignment Answers

Comparative Advantage Homework Answers for Solutions at a Low Price

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Definition of Comparative Advantage

It is primarily an economic law which refers to an economic actor’s ability to produce products and services at an opportunity cost which is lower than the rest of the economic actors. This law is attributed to political economist Mr David Ricardo who wrote about this in 1871 in the book “Principles of Political Economy and Taxation”.

In economic theory one of the most essential concepts which this law states that the case where all actors can benefit from voluntary trade and cooperation at all times. In international trade, this is a foundation theory. Learn more about this from Comparative Advantage assignment answers.

Difference between Comparative and Absolute Advantage with Example

Both these advantages are different from one another. Comparative advantage is the ability of producing commodities and services at low opportunity cost but does not mean at a volume which is greater. Absolute advantage is the ability to produce better or more commodities and services than anyone else.

For example, an attorney is a better option at producing services related to legal matters than his or her secretary and also is a fast organiser and typist. In a case like this, the attorney has an absolute advantage in legal service production as well as secretarial work.

Because of their comparative advantage, an attorney produces $150 per hour in legal and $20 an hour for secretarial duties. The secretary produces $0 per hour for all legal work and $18 in her secretarial duties. Here opportunity cost’s role is crucial.

By doing secretarial work at $20 per hour, the attorney is losing $150 income for not working on legal service. It can be seen that hiring a secretary has a comparative advantage. Know more examples like this from our Comparative Advantage homework answers.

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