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To know the core of the subject, Comparative Advantage assignment help is the best way. The subject deals with several topics related to opportunity cost and it becomes important to take professional guidance for better understanding and improved learning.
Finance defines Opportunity Cost as the “cost” a person pays in giving up one “opportunity” to settle for another. This type of cost is dependent on two mutually exclusive events. With the help of professional guidance, students will be able to understand such minute basics about opportunity cost and comparative advantage.
Understanding about Comparative Advantage
Comparative advantage is an economic activity where the ability of a group or individual is put on a test for better and efficient output. It is the base of the economics that helps you to understand the core of Economics. The ability to produce more goods and services in lesser cost than any other team or individual is all about comparative advantage. Producing high-quality goods in lower opportunity or marginal cost is the main aim of this economic activity.
Example – Consider an example to understand what this subject deals with. Say two factories X and Y are capable of producing two goods – phones and TVs. X has an output rate of 100 phones and 120 TVs daily. Y can produce 150 phones and 200 TVs daily. So, Y has a better rate of production in both departments when compared to X. Hence, Y has a comparative advantage over X.
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How to calculate comparative advantage?
Continuing from the previous example, Y produces 50 phones more than X. So, comparative advantage with phones is 150/100 = 1.5 times. Similarly, the number with TV is 80. Comparative advantage here is 200/120 = 1.67 times. The spread is more in case of TVs than phones.
How does it affect the economy?
It brings out the major change in the economy. By producing goods at lower prices, we can notice an improvement in country’s economy because the expenditure will be lesser. Also, there will be a hike in the production rates worldwide. So, the impact on economy is great. Comparative Advantage assignment help offers professional assistance to get a better grasp on the subject matter.
As the market changes, the proportion of production of the goods by one country to the other also gets changed. This maintains the benefits of comparative advantage.
Benefits of comparative advantage
Below are some advantages that can be a result of by comparative advantage activity.
- No transportation costs
- Constant cost
- Two economies can produce two goods only
- No trade barriers
- In-depth knowledge
- Production factors are convenient
These are some effects that can be predicted with trade cost. Trade cost involves transportation cost that can be a big advantage. In addition to this, history says that comparative advantage has benefits on the country’s economy. If one country is able to produce the same goods or service at much lower price than us, then it can have a benefit of comparative advantage.
Furthermore, with Comparative Advantage homework help, you can get to know the advantages and disadvantages of comparative advantages in detail. Also, it is important for you to know as it has a great impact on economic factors. So, if you are thinking to read economics in your career head, you must take professional guidance once to understand the subject matter.
Criticisms of comparative advantage in International Trade
Comparative advantage is the foundation principle in international trade theory. However, it suffers from a few drawbacks. The main pointers are:
- Assumption that labors are used in fixed proportions.
- Labor Cost assumption unrealistic as well.
- It neglects the part played by technology.
- The two-country model is also not full-proof.
- Transport costs ignored.
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