The concept of comparative advantage was first formulated by economist David Ricardo as an explanation of the benefits of international trade for countries. Pharmaceutical preparations: $37,547. C) benefit … The United States is an abundance of the low priced labor which forces in the production of goods that are human and physical capital intensive with the division of global production as brings the higher global output and the development of new technology has a comparative advantage in the production processes that can make use of less skilled labor while production migrates to countries … 3. Looking at world trade, David Ricardo used comparative advantage to prove that nations should make the goods and services that have the lower opportunity cost and require the smaller sacrifice. Businesses also may have a comparative advantage over their competitors … A comparative advantage is the specialization of production by separate businesses, people. Answer: Option(d) comparative advantage benefit the United States as the Workers and business people in the United States earn more money.. As it turns out, America's manufacturing sector -far from withering in the face of foreign competition - is actually thriving. The theory of comparative advantage states that if countries specialise in producing goods where they have a lower opportunity cost – then there will be an increase in economic welfare. America's comparative advantage. Export Category Jan.-Nov. 2011 (millions) 1. In this example, there is symmetry between absolute and comparative advantage. Producing 100 cars here costs 666 computers, while producing 100 cars in Brazil costs 1,000 computers. Through comparative advantage, the Williams household has maximized its productivity. The United States is the only country with thousands of miles of ocean separating it from anyone else with an army, navy or air force to speak of. The United States gives up the least to produce a bushel of corn, so it has a comparative advantage in corn production. 2. B) raise the price of a shirt to U.S. consumers. The United States, of course, has a comparative advantage over Brazil in the production of cars. If the United States imposes a tariff of $1 per imported shirt, the tariff will: A) decrease imports of shirts into the United States. For example, assume the United States has a Comparative Advantage in all products over both Canada and Mexico (this may not be the case.) Explanation: When a country, in comparison with other countries, produce a commodity at a lower price it is termed as comparative b.. Industrial machines, other: $37,456 Rank. It is safe to say that the United States is better equipped and more prepared to produce more agricultural products than Mexico.2 However, the use of a comparative advantage and specialization can benefit both countries. Petroleum products: $87,543. Similarly, absolute advantage is said to be a country with the use of less resources produces a commodity. This concept means that jobs in areas where the United States has the least advantage will go to Mexico or Canada, and the United States will produce only those goods where it has the best Comparative Advantage. or countries, and are useful when a country has… And the oceans and the air space above them and above every other country are part of America’s military territory, since only its navy and air force can roam them freely. His theory concluded that a country could increase its income by specializing in certain products and services and selling these on the international market. Note, this is different to absolute advantage which looks at the monetary cost of producing a good. Costs 666 computers, while producing 100 cars here costs 666 computers while! Costs 666 computers, while producing 100 cars in Brazil costs 1,000 computers States gives up the to... 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