Q. 28. Can a nation鈥檚 comparative adv... [FREE SOLUTION]

Chapter 33: Q. 28. (page 804)

Can a nation鈥檚 comparative advantage change over time? What factors would make it change?

Short Answer

Expert verified

Nation's comparative advantage change over time with certain important factors.

Step by step solution

Step 1. Meaning of comparative advantage.

The ability to produce a product at a relatively lower cost or to produce a higher quantity at the same cost is known as absolute advantage. While, the ability to produce at a realtively lower opportunity cost is known as competitive advantage.

Step 2. Nation's comparative advantage.

Basically, a nations' comparative advantage can change over time if it acquires efficiency in the production of a good or services due to technological and or social changes.

Step 3. Important factors that result into change in comparative advantage.

a) Geographical diversity.

b) Tradition.

c) Productivity Differences.

d) Technology.

e) Human skills.

f) Product life cycle.

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Can a nation鈥檚 comparative advantage change over time? What factors would make it change?

Short Answer

Step by step solution

Step 1. Meaning of comparative advantage.

Step 2. Nation's comparative advantage.

Step 3. Important factors that result into change in comparative advantage.

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