Question

If a country (like Bangla Desh) has a comparative advantage in Jute (an agricultural fiber used in making rope and some clothing), would you advise it to rely on exporting that crop indefinitely? (

Answer 1

Answer: Yes, I'll advise Bangladesh to export jute indefinitely.

Explanation:

Comparative advantage is a term that refers to the ability of an economy to manufacture goods and services at an opportunity cost that is lower than its trade partners. Comparative advantage provides a firm or nation the capability to market its products and services at a cheaper amount than its competitors thereby gaining larger sales margins and more profit.

If Bangladesh has a comparative advantage in jute production, I'll advise it to export it indefinitely. Due to its comparative advantage, the country will produce jute at a cheaper rate with lower opportunity cost than when producing another good. The production of jute can also make the nation the world's producer of jute if its price drive other markets away. Through its exportation, economic growth and development can occur in the nation too.