Chapter 18.1, Problem 2R

To determine

To evaluate the advantage that each situation gives a country.

Explanation of Solution

Advantages in production
Absolute	A country with an absolute advantage may manufacture goods with lower labor costs (less resources, cheaper products, less workers, etc.). it refers to a country's ability to generate a good more effectively than the others.
Specialization	Specialization tremendous effects on productivity .The more they concentrate on one task, the more productive they become in this role, which ensures that a good is created with less time and less money. Finally, resources that can be used more effectively.
Comparative	Comparative advantage is a term referring to the capability of a country to create productions at a minimum cost of opportunity than that of the trade partners. It gives a firm to sell products at a minimum rate than its competitors and to achieve stronger sales margins.

Economics Concept Introduction

Introduction: Trading are important for national economies to develop and grow because not all countries have the resources and skills needed to produce certain goods and services. Sometimes countries are specialized in producing certain commodities, manufactured goods or services. Trade is therefore very important to national and global economic growth, because we are all dependent on one another.