Question

Briefly explain whether you agree with the following​ argument: ​"Unfortunately, Bolivia does not have a comparative advantageLOADING... with respect to the United States in the production of any good or​ service." ​(​Hint: You do not need any specific information about the economies of Bolivia or the United States to be able to answer this​ question.)

Answer 1

Answer:

I agree, since some countries are better equipped with respect to the production of some good, it makes a difference between them, in this case the United States has a comparative advantage over Bolivia.

Explanation:

A simple example to demonstrate the comparative advantage of the United States vis-à-vis Bolivia is the costs that refer to transportation. For example, when the United States sells a compound such as tin, it is not only selling this mineral, but also selling its services in the transfer, seen in this way, the cost of transportation would influence the exchange of goods. To demonstrate this point of view, if both countries sell tin, but the price in Bolivia is much higher than in the United States, a comparative advantage of the United States vis-à-vis Bolivia in the production of such mineral would clearly be observed.