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Chapter 19: Q 28. (page 462)

Can a nation’s comparative advantage change over

time? What factors would make it change?

Short Answer

Expert verified

Yes, the comparative advantage may change.

Step by step solution

01

Step 2. Definition

The ability to produce a good or service at a relatively opportunity cost than others is known as comaprative advantage.

02

Step 2. Explanation

Yes, a nation’s comparative advantage changes over time because of various factors. This happens in industries that are not dependent upon climate and natural deposits of minerals and other resources. Technological upgradtion, accumulation of knowledge, chnages in efficiency conditions, etc can cause opportunity costs to change as well. Since, comparative advantages depend on opportunity costs changes in these factors can change comparative advantage as well.

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Most popular questions from this chapter

What factors does Paul Krugman identify that

supported expanding international trade in the 1800s?

Table 19.15 shows how the average costs of production for semiconductors (the “chips” in computer memories) change as the quantity of semiconductors built at that factory increases.

a. Based on these data, sketch a curve with quantity produced on the horizontal axis and average cost of production on the vertical axis. How does the curve illustrate economies of scale?

b. If the equilibrium quantity of semiconductors demanded is 90,000, can this economy take full advantage of economies of scale? What about if quantity demanded is 70,000 semiconductors 50,000 semiconductors? 30,000 semiconductors?

c. Explain how international trade could make it possible for even a small economy to take full advantage of economies of scale, while also benefiting from competition and the variety offered by several producers.

Look at Table 19.9. Is there a range of trades for

which there will be no gains?

True or False: The source of comparative advantage must be natural elements like climate and mineral deposits. Explain.

In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?
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