Question

Because of the quantity and quality of its resources, the U.S. has an absolute advantage in the production of many goods and services. Does this imply that the U.S. cannot benefit from trading with a developing country that has less productive ability

Answer 1

Answer:

1. It produces such type of goods for which it has a comparative advantage.

2. It trades to receive that type of goods for which it does not have a comparative advantage.

Explanation:

U.S. has an absolute advantage in the production of many goods and services because of the quantity and quality of its resources.

The U.S. can benefit from trading with less productive countries under the following situations:

1. It produces such type of goods for which it has a comparative advantage.

2. It trades to receive that type of goods for which it does not have a comparative advantage.