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Read the article titled "Comparative Advantage." Explain what comparative advantage is and how it relates to opportunity cost.
How do these principles explain why Americans have exported customer service operations to India?

Answer 1

Comparative advantage is the ability of producing at a lower cost.

Step-by-step explanation:

• The article states that comparative advantage is the ability of producing goods and services at a lower cost than any other producers. The producer does not necessarily have to the best producer of a particular good or service but as long it meets the demand, it has an advantage.

• The costs that is incurred while producing a good or service is the opportunity cost. Comparative advantage is related to opportunity costs as it helps the producer to find comparative advantage.
• For instance, when you can find someone who is unskilled yet has comparative advantage over producing a good or service, then it helps you to produce at a lower costs. You don't need to hire a professional as long as someone can perform the task in a comparative manner.
• This principle can be seen on why Americans have exported customer service operations to India. Though English-language skills of the workers are seemingly low, they can still perform their tasks and thus, meet the demands of the market. This is because the workers from India have comparative advantage and the cost incurred on them are lower than American workers.