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7 votes

Why does anyone prepare their own food?

The weights used in the U.S. CPI (from 2016) are available here: link to BLS weights. Note that these weights are based on consumption data, so that they are meant to align with actual spending ...
Brian Romanchuk's user avatar
5 votes
Accepted

Who exploits comparative advantage in international trade?

It's fine to make a supposition that it costs Colombia twice as much to make cars as coffee, and Japan twice as much to make coffee as cars. It's also fine to express these ratios in terms of the ...
Adam Bailey's user avatar
  • 8,529
4 votes
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Which countries have the comparative advantage in Ricardo's example?

The mistake that you are doing is that you are treating the numbers in the table below that I assume you took from wikipedia as quantities that can be produced but they are not ...
1muflon1's user avatar
  • 57.3k
4 votes
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Is comparative advantage undermined by a welfare state?

The basic result about the effect of trade on income distribution is Stolper-Samuelson in the Heckscher-Ohlin model, which says that trade liberalization is associated with a rise in the prices of the ...
Ege Erdil's user avatar
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3 votes
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Does free capital mobility invalidate the basic comparative advantage argument for free trade in goods?

Daly actually does explain further what he means by that in footnote 7 of his paper: Capitalists are interested in maximizing absolute profits and therefore seek to minimize absolute costs. If ...
got trolled too much this week's user avatar
2 votes
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Real world evidence that voluntary exchange is mutually beneficial?

First of all, there is no need to believe any economic dogma. The real world is usually more complicated than these stories. If anyone can convince me of something with a two minute anecdote, that was ...
Giskard's user avatar
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2 votes
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(Ricardian model)Is it correct that complete specialization in comparative advantage CAN lead to DECREASE in total production?

Its not correct to say that production will be lower in the solution to the Ricardian model (in your case full specialization of US is not equilibrium outcome). In general in Ricardian model the ...
1muflon1's user avatar
  • 57.3k
2 votes
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Why Is Having a Strong Manufacturing Base Important to a Country's Economy?

I don't think there is one answer to this. Anything that helps you win a war needs to be produced domestically, because trade will stop during conflict. Hi-tech industries and vehicles are things ...
user27075's user avatar
1 vote

Does Ricardian comparative advantage lead to higher quality goods and services?

I'm not certain where you came across this example, but I believe that the standard model of Ricardian Trade theory may not be applicable to the situation between India and the US. One of the reasons ...
Amit's user avatar
  • 9,196
1 vote

Does Ricardian comparative advantage lead to higher quality goods and services?

I would like to know if Ricardian comparative advantage leads to higher quality of goods and services in an economy. Ricardian comparative advantage theory does not make any prediction about quality ...
1muflon1's user avatar
  • 57.3k
1 vote

Combined PPF (Equal quantities) & Combined PPF (Specialization)

It looks like your table is incorrect. Dale has to give up 4 muffins to make a cupcake. Billy has to give up 3 muffins to make a cupcake. Therefore, Billy has the comparative advantage in cupcakes (it ...
A. Miller's user avatar
  • 151
1 vote

What actually is comparative advantage?

Comparative advantage is based on opportunity cost (see Krugman et al International Economics Ch 3). However, opportunity cost depends on how productive economy is so you can in principle reformulate ...
1muflon1's user avatar
  • 57.3k
1 vote
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What is technology in the Ricardo model?

this is attributed to better computer-production technology in the US. But what is that technology? Is it better physical capital, in the form of computer-building machines? Is it better human capital?...
1muflon1's user avatar
  • 57.3k
1 vote

Does free capital mobility invalidate the basic comparative advantage argument for free trade in goods?

Daly gets a lot wrong, including (in my view) the idea that capitalists pursue absolute profits in an economy that rests on fiat currencies and foreign exchange markets. Indeed, the very notion of ...
heh's user avatar
  • 1,806
1 vote

Basic question on trade based on comparative advantage

You did not factor in the 4 Darwinian goals of global trade: Find foreign markets to absorb excess production, that is, where excess production can be dumped. Extract foreign resources at low prices. ...
Daniel's user avatar
  • 476
1 vote

Is comparative advantage only beneficial with convex utility functions?

What traditionally matters is a quasiconcave utility function (that is, the individual/country at least weakly prefers mixing such that all better sets are convex). I assume that's what you're ...
AndrewC's user avatar
  • 1,380
1 vote

Can people lack a comparative advantage and a comparative disadvantage?

You might be confusing comparative advantage with absolute advantage. Comparative advantage is focused on opportunity costs. You are assuming that person A is good at cooking, B is good at foraging, ...
MH.Q's user avatar
  • 123

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