Lesson 1.6 Group Discussion

Danny, Allen

Danny, Allen

by Tan Dung (Danny) Le -
Number of replies: 0

1. Absolute advantage is when a country can make a product more efficiently than another country; comparative advantage is when the country makes a product with a lower opportunity cost. For example, when Country X can make 50 chairs and Country Y can make 20 chairs, Country X has an absolute advantage in making chairs. Another instance is Country X can produce 50 chairs or 20 tables and Country Y can produce 30 chairs or 20 tables, so Country Y has a comparative advantage because it has a lower opportunity cost in making tables

2. Use tariffs to raise product prices because the government wants to protect local industries by making imports more expensive. They are flexible and can be adjusted easily. Import quotas are better when the government wants to limit how much of a product can be imported to protect local businesses or keep prices stable. Quotas control the number of imports, giving stronger protection to local industries.

3. Yes, I would put more taxes on the products and set up product quotas in order to protect the local industries and the country in terms of the pandemic.