Please download and use the above linked template/worksheet for this assignment. (Make sure you download and SAVE the template first to change from ‘read only’ into ‘edit’ so that once you type your answers on to it, they will be saved) Also, please first watch this short 4-minute YouTube welcome video – it will help a great deal with this commonly misunderstood assignment.
Leave the template ‘as is’ – you will not change the generic names of countries A and B. Listing specific country names like South Africa or Romania is a clear indication of not reading the instructions or watching the above linked video. Please take the time to use these resources are this ia very commonly misunderstood assignment. If you need any additional help. Please call.
Absolute advantage – deals with who is the most efficient, meaning who is the fastest, who has the lowest number of worker hours. So, you simply look at who has the lowest number in each column. That country would have the absolute advantage for that product.
Comparative advantage – deals with who has the lowest opportunity cost to produce one product instead of another. In order to determine this, you must first do the math to find out the data for the ‘additional worker hours’ column. Once you have those numbers, you simply look at who has the lowest number, and whoever has the lowest number, has the lowest opportunity cost, and thus the comparative advantage.
05.04 Trade Analysis—Template
- Use the chart in the lesson to identify one developing country and one developedcountry to compare to the United States. Use the tables below to record data for each country. Then respond to the analysis questions.
Table 1: Identify one developing and one developed country along with the United States. Complete a trade analysis for agricultural products.
|Corn||Citrus||Number of additional worker hours to produce one unit of citrus instead of one unit of corn|
|Developing Country A||6||10|
|Developed Country C||2||6|
Table 2: Identify one developing country and one developed country along with the United States. Complete a trade analysis for industrial products.
|Apparel||Computer Software||Number of additional worker hours to produce one unit of computer software instead of apparel|
|Developing Country A||4||12|
|Developed Country C||2||8|
- Analysis—Using the data you collected, answer each of the following analysis questions in well-written paragraphs in your own words.
- Identify an example of absolute advantage relative to the United States from your data tables. Be sure to identify which country has absolute advantage (U.S. or other), the product, and data to support your claim. Tip: When considering absolute and comparative advantage, worker hours to produce one unit is a reflection of productivity.
- Identify an example of comparative advantage relative to the United States from your data tables. Be sure to identify which country has comparative advantage (U.S. or other), the product, and data to support your claim.
- Explain why most trade occurs because of comparative advantage. Be sure to provide examples from the data tables or from the lesson to support your answer.