Economic Disadvantages And Economic Advantage

1249 Words3 Pages
bulb-icon

Recommended: Effects of immigration on the economy

The birth of this nation was built upon the hands of individuals who came to this nation seeking a better life. It must have took a lot of courage to leave their homeland, families, and a country where for the most part was efficient and well established, but so many did to start anew. Upon arriving in this nation, it didn’t take long for the settlers to discover the abundance of resources available and to know that the abundance of resources/ goods were extremely valuable. As the states flourished, so too were the desire for specific resources, goods/ services. For this reason, this paper will explain the economic perspective of comparative/absolute advantage and how they economically impact decisions made in our nation.
Comparative advantage, in economics, refers to the ability of one group or company to produce a good/ service more efficiently than another (Lipsey, R. G., & Dobson, W. 1987). Determining how efficient the goods/services are depends on how low the marginal and opportunity cost are in contrast to another company. To explore the concept of comparative advantage, we must first analyze the concept of marginal and opportunity cost. Marginal cost is the actual cost it takes to produce an additional good. For example, if a company producing additional televisions requires building a new warehouse, the marginal cost of the extra television, includes the cost of the new warehouse. Marginal cost may be effected by market failures. Market failures are the concept by which economist use to describe why the free market system doesn’t work efficiently (SalanieÌ, B. 2000). There are many factors which affect the marginal cost, which include negative and positive externalities.
The term externality refers to the cos...

... middle of paper ...

...ountries, in the sense that both countries have resources which undoubtedly, through trade, could benefit both countries. You still may be a little confused by the ideas of comparative/ absolute advantage, so, to sum up these ideas I will say they differ primarily in terms of the value either country has to consider when making decisions regarding goods/services. Like Mr. Lincoln needed to do when determining who should build his rails. I disagree with Mr. Lincoln because I have taken the time to understand the opportunity cost, and the advantages as well as disadvantages associated with trade, labor and the fundamentals of economics. In saying this, I do understand that it is those before me, such as Mr. Lincoln who I give gratitude to because now we are able learn from their mistakes as well as determine which economic decisions are most valuable for our nation.

Show More
Related

  • Cocktail Party Economics Summary

    735 Words  | 2 Pages

    To reiterate, let’s construct another example of two companies that produce oranges. Company number one is located in Florida where it’s the perfect environment to produce oranges. Company number two however is located in Toronto, which to be fair, isn 't a suitable environment to produce natural oranges, unless of course they’re produced in a green house. Although both companies are able to grow and produce oranges, company number one has the absolute advantage because they use the much cheaper and natural methods, hence the greater demand. This theory can be contradicted with the concept of comparative advantage, which in description means the ability to produce specific goods at a lower opportunity

    Read More

  • The Pros And Cons Of Industrialization

    343 Words  | 1 Pages

    Industrialization is the process in which an economy is changed from an agricultural economy to a manufacturing approach and manual labor is replaced by machines in factories. Industrialization brought a more diverse amount of goods and more total goods and improved living for many but, for others it resulted in harsh working and living conditions for the poor and working class. Many positives and negative were present during the industrialization of the U.S. Positives such as more goods being distributed, easier way of doing things, and being able to mass produce. Negatives like children working long and difficult jobs and many workers having poor working conditions.

    Read More

  • Common Sense Economics: What Everyone Should Know About Health and Prosperity

    1617 Words  | 4 Pages

    Despite its size, only 190 pages, the authors address the basic concepts of economics while also applying those politically and for personal finance decision making. Those basic concepts include scarcity, gains from trade, marginal decision-making, profit management, income growth, and Adam Smith’s invisible hand theories are all discussed within the first part of the book; allowing readers to understanding the concepts, Gwartney applies the same concepts to the creation of wealth and the importance of competition, private property, open trade, monetary stability, and lower taxes. This book educates its audience by evaluating our economy and government mechanisms without the overpowering display of charts, formulas, and graphs; which you would typically see in a textbook allow...

    Read More

  • The Principles And Theories Of Microeconomics

    971 Words  | 2 Pages

    ...eir welfare as efficiently as they possibly can. According to Harberger (2008), “This process helps them to decide what they will supply and what they will demand,” essentially the ideology that birthed this statement translates into opportunity cost. Forgone opportunity, “or the best alternative sacrificed for a chosen alternative,” Tucker (2013), from the consumer or firms perspective, revolves solely around what they must sacrifice varying from factors of production to the establishment of mutually beneficial alliances with other consumers or firms, etc. Nevertheless, in conjunction with supply and demand, these two primordial concepts form a platonic relationship that generates countless influential possibilities with respect to the decisions made by consumers and or firms in order to truly generate what they perceive as the most efficient use of their resources.

    Read More

  • Economic Controls in the U.S Constitution: An Analysis

    711 Words  | 2 Pages

    e) In the context of history, what the Framers wanted is important question, but it’s bearing on the functionality of the U.S. government and economic relations today is of no significant importance. The manner in which the government conduct’s its socio-economic policy is far removed for the originally system devised. While we should always continue to examine what the Founders wanted, it does not really matter for day to day practical reasons. Throughout the Nation’s history the economic element of The Constitution has been changed repeatedly to fit the ideologies of those in power or to cure some ill of the national economy. Also, the system constructed by the Founders was to preserve wealth for those already wealthy, but the systems of power have balanced out, and to a degree more people are able to acquire wealth and keep it. Thus, what the Founders wanted, while historically important, does not matter to the drastic change in the operation of government involvement in the

    Read More

  • Singapore And Singapore: A Comparative Advantages Of Singapore

    1143 Words  | 3 Pages

    Comparative advantage means that an industry, firm, country or individual are able to produce goods and services at a lower opportunity cost than others which are also producing the same goods and services. Also, in order to be profitable, the number in exports must be higher than the number in import. From the diagram we seen above, Singapore is seen to have a comparative advantage in some services. The services are Transport, Financial, business management, maintenance & Repair and Advertising & Market Research, etc. These export services to other countries improve the balance of payment. On the other side, Singapore is seen to have a comparative disadvantage in some services. The services are Travel, Telecommunications, Computer & Information,

    Read More

  • Amazon Competitive Advantage Case Study

    1173 Words  | 3 Pages

    Competitive advantage is the advantage for the competitors and gained by the offerings from the consumers that have the greater value either by the low prices of the products and by providing the benefits and services to the consumers that denotes the high price. It is a set of the innovative and different features of the company and the products and services sale to the consumers so that company can achieve the targets what they have decided and it is the betterment for the enterprise in the competitive market (Porter, 2011). There are three determinants which can be used in the competitive advantage that what the company produce for their consumers, their target market that what they have to achieved and the competition from the other entity

    Read More

  • External Environment Of Japanese Business

    1693 Words  | 4 Pages

    Comparative advantage is a dynamic concept. It can and does change over time. Some businesses find they have enjoyed a comparative advantage in one product for several years only to face increasing competition as rival producers form other countries enter their markets.

    Read More

  • Comparative Disadvantages: Hyperglobalization And Comparative Advantage

    559 Words  | 2 Pages

    The article examines some of the influential theories in the domain of international trade including hyperglobalisation and comparative advantage. The publisher was keen to demonstrate how the theories need to be embraced since hyperglobalisation promotes investments flows from partners pursuing such trading agreements. The trading partners can still reduce their operation cost such as transportation while still navigating the complexities of hyperglobalisation. The author also endeavored to demystify the terminology of comparative advantage by issuing examples and previous concerns reported on the subject. It has been hailed that the traders often traded as per their factor endowments by concentrating on spheres of their specialty. The author also hinted to the readers that the theory of comparative advantage is a major concept since it is the first theory that economics students are briefed on. Arguments in support of the theory reveals that countries that have this level of visibility stand to benefit massively once they specialize in areas of their specialty. He purp...

    Read More

  • Compare And Contrast The Four Market Structures

    1100 Words  | 3 Pages

    The 4 market structures in relation to the benefits and costs to the consumer and producer

    Read More

  • International Trade and The Global Economy

    1026 Words  | 3 Pages

    David Ricardo was a leading economist in the 1800s. Ricardo was a leading advocate of free trade. Adam Smith was also an advocate of free trade. Smith was more confident than Ricardo that the ability of a market economy's potential could benefit society. (Carbaugh, 2009). Ricardo felt that a countries government should not meddle in free trade and could hinder free trade instead of help it. Ricardo's theory of comparative advantage has been used by economists for years. The law of comparative advantage states that the citizens of each nation can gain by spending more of their time and resources doing those things in which they have a relative advantage (Carbaugh, 2009, p12). What this means is that one needs to determine whether the production of a goods or service is done more economically either domestically or abroad. Even if one country has the advantage in all situations, both countries can still benefit. The theory states that the less efficient nation should specialize in and e...

    Read More

  • Role of Governments in Trade

    1713 Words  | 4 Pages

    In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...

    Read More

  • The Effect of the Development of Large Firms on Society

    535 Words  | 2 Pages

    The Effect of the Development of Large Firms on Society Many firms choose to expand in size because of the cost and market share benefits the firms can reap. However, the development of large firms may not always be of benefit to consumers, and the advantages and disadvantages will be discussed in the following essay. Because larger firms such as Shell Petrol Station are able to experience internal economies of scale through lower unit costs, many of the cost savings are then passed on to the consumers through lower prices. Hence consumers are then able to enjoy greater consumer surplus, defined as the difference between the maximum price that a buyer is willing to pay for a good or service and the actual price paid. As seen from the diagram below, the marginal cost curve shifts to the right such that the new marginal cost = marginal revenue equilibrium lowers the price and increases the output level compared with the initial equilibrium.

    Read More

  • The Advantages and Disadvantages of Free Trade

    1549 Words  | 4 Pages

    Functionalism: The discord that interest in one reach, (for instance, trade) pushes coordinated effort in distinctive extents. In principle, the pills issue, movement issues, et cetera are all tended to fortnightly

    Read More

  • Advantages And Disadvantages Of International Trade

    921 Words  | 2 Pages

    International trade is an economic practice where countries can import and export goods with no concerns to government intervention which includes tariffs and import/export bans or limitations. International trade has several advantages on developing countries; who are nations with low levels of economic resources or low standard of living. Developing countries can advance their economy through strategic free trade agreements. Free trade generally improves the quality of life of poor nations. Nations can import goods that are not easily available within their borders; importing goods may be cheaper for than trying to produce consumer goods. Many developing nations do not have the production procedures available for translating raw materials into valuable goods.

    Read More

More about Economic Disadvantages And Economic Advantage

Open Document