What is a real life example of comparative versus absolute advantage? - real life example of supplementary angles
I'm trying to compare the absolute and comparative advantages, and wants a real example.
Real Life Example Of Supplementary Angles What Is A Real Life Example Of Comparative Versus Absolute Advantage?
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An example might be ...
The cost of producing a barrel of crude oil in the United States is 10 hours and 12 hours of work in Mexico. The production cost of one meter substance in the United States is 12 hours and 13 hours of work in Mexico.
The United States has an absolute advantage in both markets, that is, it is expensive to produce these two questions in relation to the hour.
If the United States and Mexico led the discussion on the oil market and materials, the relative price of oil U.S.
10 / 12 = 1 / x
x = 1.2 meters of fabric per barrel of oil
and the price for U.S. Equipment:
12 / 10 = 1 / x
x = 83 barrels of oil per meter of fabric
In the meantime, the relative prices in Mexico are as follows:
Oil: 12 / 13 = 1 / x
x = 1083 meters of fabric per barrel of oil
Material: 13 / 12 = 1 / x
x = 923 barrels of oil per meter of fabric
Mexico has a comparative advantage in oil, because their relative cost of a barrel of oil is cheaper than in the United States of America (USA: 1.2 vs. Mexico: 1083). The United States, but has comparate advantage cloth (U.S.: .83 vs. Mexico, 923)
This means that the U.S. and Mexico would benefit in the fabric for the trade.
As I was incredibly beautiful is an absolute advantage, while I, like pencils, pens on comparative.
As I was incredibly beautiful is an absolute advantage, while I, like pencils, pens on comparative.
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