Question

Using the chart, identify an example of comparative advantage for either Country A or B over the United States. Be sure to identify the country with the comparative advantage over the U.S. and product. Explain how the availability and use of a natural resource may impact advantage.

Answer 1

Answer: Country B has a comparative advantage over the United states in coal. It takes country B two fewer hours than the U.s. to produce 1 ton of coal.

Explanation: when a natural resource is more available and easily accessible, this gives a country an advantage over other countries because it takes less time to attain that resource and prepare to sell and trade it. When a country doesn't have to put as much time and money into producing something they have the greater advantage.

Answer 2

U.S.
1 barrel of oil = 4 hrs
1 ton of coal = 5 hrs

B
1 barrel of oil = 7 hrs
1 ton of coal = 3 hrs

inversely,

U.S.
1 hr = 1/4 barrel of oil
1 hr = 1/5 ton of coal

B 1hr = 1/7 barrel of oil
1hr = 1/3 ton of coal

You can see that B has the comparative advantage in coal because 1/3 > 1/5 It means they are better at producing coal than the U.S. because, in 1 hour, B can produce 1/3 ton of coal, while the U.S. can only produce 1/5 ton of coal in the SAME AMOUNT OF TIME.

I think that the country which has more availability has a comparative advantage over other countries. International trade is based on comparative advantage and the fact that Arab countries which have more availability of oil , indeed have a comparative advantage in oil, supports my argument.