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Chapter 19: Q 18. (page 462)

Why does the United States not have an absolute

advantage in coffee?

Short Answer

Expert verified

Because of the climatic conditions, the United States does not have an absolute advantage in coffee.

Step by step solution

01

Step 1. Definition

The ability to produce a greater quantity of a good or service with the same quantity of inputs por to produce the same quantity of a good or service using a lesser quantity of inputs is referred to as absolute advantage.

02

Step 2. Explanation

The US does not have the favorable geogrpahical conditions that could grow coffee. The appropriate temperature ranging between 25°C to 30°C and rainfall between 150-200 cm is not found in the US. Thus, because of the lack of sutiablegeogrpahical condition, the US does not have absolute advantage in production of coffee.

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Most popular questions from this chapter

Is it possible to have a comparative advantage in

the production of a good but not to have an absolute advantage? Explain.

Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40 pounds of beef or 30 autos. Which country has the absolute advantage in beef? Which country has the absolute advantage in producing autos? What is the opportunity cost of producing one pound of beef in Brazil? What is the opportunity cost of producing one pound of beef in the United States?

Why might intra-industry trade seem surprising

from the point of view of comparative advantage?

You just overheard your friend say the following:

“Poor countries like Malawi have no absolute

advantages. They have poor soil, low investments in formal education, and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade.” How would you respond?

From earlier chapters you will recall that technological change shifts the average cost curves. Draw a graph showing how technological change could influence intra-industry trade.
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