Comparative Advantage in International Trade

Comparative Advantage in International Trade

Comparative Advantage in International Trade

Read the articles:

1) The Boomerang effect.

http://www.economist.com/node/21552898

2) Comparative Advantage and American Jobs.

http://online.wsj.com/article/SB10001424052748703555804576102500952966450.html

In your initial response to the topic you have to answer all questions:

1) Does the protection of one domestic industry harm another? Please explain.

2) Why does comparative advantage matter more than absolute advantage for trade? Please explain.

3) Reflection –in the initial response in their own words reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace.

· Comparative Advantage and American Jobs – WSJ.pdf

(174.91 KB)

· Comparative advantage_ The boomerang effect _ The Economist.pdf

(356.98 KB)

Directions: Read the Answer /Response below and give a comprehensive analysis in one paragraph using an example to show understanding of material.

Do not answer the questions again, Just respond to the answer /response section as directed above.

ANSWER/Response

1-

The U.S. will protect domestic industries in order to protect against the import of foreign firms’ products. Foreign firms are usually able to produce products and sell them at a much cheaper cost than the U.S. domestic firms will (The Economist, 2012). So, in the instance of trade (import and export), the protection of U.S. domestic industries harms the trade industry of foreign firms.

2-

Comparative advantage is more important than absolute advantage because comparative advantage means the country is self-sufficient in producing their own variety of goods. Comparative advantage offers a greater opportunity cost and allows the country to choose between different options for production specialization when production advantages are marginal and resource limitation exist (Segal, 2019)

3-

From this discussion assignment, I learned the difference between different costs that go into developing a product and how sometimes a more costly option will result in greater overall profitability. This is easily applied to the workplace by keeping in mind that cheaper options may be tempting at the moment, but looking at the overall big picture will illustrate the greater profit margin for the options available. This is important to consider as a business owner or a professional in the position to make management decisions in budgeting.

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