Specialization in Action: In the countries of China and India, there are more individuals that have specialized knowledge, skill, and ability that are being offered to the U. Africa has a much greater absolute advantage over the United States. This comparison would be indicative of either an advantage or disadvantage because the economy is not able to generate the resource another might or vice versa.Ībsolute Advantage in Action: There are a limited number of diamond mines in the world and most of the big mines come from Africa. And there are lands that cannot produce the same types of goods or wine. Some grow crops, some grow vineyards, etc. I Comparative Advantage in Action: There are certain lands that are rich and fertile. Trade balance or "net export" occurs when there is a parallel increase of Gross Domestic Products (GAP) with the domestic rate of consumption, expenditure, and investment within trade imports and exports. Specialization focuses on an economy's resource for knowledge, skill, or ability in such a way as to improve productivity and increase the market economy. Absolute advantage occurs when an economy can produce a particular resource with fewer inputs and or more efficiently. Comparative advantage occurs when one economy has an advantage over another because it is able to generate a particular resource where another economy cannot.
I Comparative Advantage, Absolute Advantage, Specialization and Trade Balance (p. I "Production possibilities Economics Worksheet By confirm be produced in a full-employment, full-production economy where the available supplies of resources and technology are fixed" (McConnell & Bruce, 2005, G-19). These are all things I can do using a production possibility curve. Also, I would need to consider the radius of other coffee r tea houses, the area demographics, the economy of the location. I could weigh several production possibilities: coffee beans versus tea leaves donuts versus bagels coffee cake versus cinnamon rolls. I Production Possibilities Curve in Action: In this scenario, I have Just purchased a small office space on Main Street and I am considering either opening a coffee shop, or tea house. Production possibility involves an economies output of goods or resources and all of the various combinations the curve chart will essentially guide the decision based upon the production outputs at various levels and inputs/outputs. "Opportunity cost: The amount of other products that must be forgone or sacrificed to produce a unit of a product" (McConnell & Bruce, 2005, G-17). "Tradeoff : The sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service" (McConnell & Bruce, 2005, G-24). I "Scare resources: The limited annuities of land, capital, labor, and entrepreneurial ability that are never sufficient to satisfy people's virtually unlimited economic wants" (McConnell & Bruce, 2005, 6-21). This alternative is a part of the decision-making process. Opportunity cost in Action: Again, using the example in scarcity, I can apply opportunity cost in my going to the freezer section of the supermarket and getting weighing the product cost of the berries: the cost of the frozen bag (2 pints) was less than half of the market price for fresh berries. I was feeling the financial pain as I reached in and paid the money for the privilege of eating a fresh berry during the winter. Trade-off in Action: In the aforementioned example, there was also a trade-off involved in the acquisition of my berries. Even though the berries were much more expensive, I was willing to pay more because berries are not as prolific in the winter. 99 when during the summer, the same pint of berries were 2-for-$5.
I Scarcity in Action: Yesterday I went to the market and was going to buy a pint of blueberries to put on waffles the next morning for breakfast. Opportunity cost involves the estimation of the final cost off resource as it is gauged against the value of the alternative or next-best scenario. Trade-off involves the final cost for a resource based upon the person or entity giving something or many things up in return for the desired good. Scarcity involves resources with limitations no matter how much money or trade is offered in exchange for resource, there is a demand that will always be greater than the quantities available.
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