ECN221_Dowell_Week4_Assignment.docx

More resources while the comparative advantage is

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more resources, while the comparative advantage is what decides whether it pays to produce a good or import it. The opportunity cost of developing a specific creation is equivalent to the prospective subsidy that could have increased by choosing a substitution. “Comparative advantage leads to more income for countries. It’s a key argument in favor of free trade. By comparison, restrictions on trade in the form of tariffs or quotas skew comparative advantages. The result is products that should have been imported become more expensive and resources are wasted on activities that don’t produce the highest return” (Segal, 2018). The United States has an absolute advantage in creating computers/computer parts, whereas Brazil has a comparative advantage with the computers/computer parts. “Americans have an absolute advantage in producing computers, Brazilians have a comparative advantage. Compared to what must be sacrificed, Brazil produces computers for only two-thirds as much as
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ABSOLUTE VS. COMPARATIVE 3 it costs in the United States” (Lee, 1999). Even though the Brazilians have low wages, it still does not come into consideration towards their products being at a lower cost. Innately, workers in the United States will be rewarded more than those in Brazil for a simple reason; they are more prolific. In the terms of output, lower paid workers do not mean lower costs. “There is
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