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Chapter 19: Q 28. (page 462)

Can a nation鈥檚 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鈥檚 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

If the removal of trade barriers is so beneficial to international economic growth, why would a nation continue to restrict trade on some imported or exported products?

What is absolute advantage? What is comparative advantage?

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

which there will be no gains?

Do consumers benefit from intra-industry trade?

Is it possible to have a comparative advantage in

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