Theory of Comparative Advantage
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Title: Theory of Comparative Advantage

Essay Details:

Subject: Business
Author: John T
Date: May 28, 2015
Level: University
Grade: B
Length: 3 / 753

Essay text:

Saudi Arabia has large supplies of oil, but lacks the built capital to produce cars and electrical equipment. Trade between Saudi Arabia and Japan will allow both countries to obtain goods and services that they cannot produce themselves. Specialization and trade can then deliver higher living standards to all countries as resources are being used more efficiently. Definition of Comparative Advantage To illustrate the concept of comparative advantage requires at least two goods and at least two places where each good could be produced with scarce resources in each place. The example drawn here is from Ehrenberg and Smith (1997), page 136...

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