Comparative advantage - Revision history

Pestergaines: /* Links */ +res; + WP link

2013-02-22T12:07:35Z

Links: +res; + WP link

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	* [http://www.youtube.com/watch?v=7yOHjRThM_o&feature=player_embedded Trade is Made of Win, Part 2: Cooperation] (video)		* [http://www.youtube.com/watch?v=7yOHjRThM_o&feature=player_embedded Trade is Made of Win, Part 2: Cooperation] (video)
	* [http://www.youtube.com/watch?v=qdcQLWGaJoM&feature=player_embedded Trade is Made of Win, Part 3: Conservation] (video)		* [http://www.youtube.com/watch?v=qdcQLWGaJoM&feature=player_embedded Trade is Made of Win, Part 3: Conservation] (video)
			* [http://www.ted.com/talks/matt_ridley_when_ideas_have_sex.html 'When Ideas Have Sex'] (video) with [[Matt Ridley]] (explains the comparative advantage at 5:05)
			* {{wplink}}

	[[Category:Economic concepts]]		[[Category:Economic concepts]]

Pestergaines: /* Links */ +res

2013-02-22T12:04:20Z

Links: +res

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	* {{md\|3015\|Cooperation: How a Free Market Benefits Everyone\|[[Jeffrey Tucker\|Jeffrey A. Tucker]]\|June 2008}}		* {{md\|3015\|Cooperation: How a Free Market Benefits Everyone\|[[Jeffrey Tucker\|Jeffrey A. Tucker]]\|June 2008}}
	* [http://www.mises.ca/posts/articles/fundamental-economic-concept-lost-in-translation/ "Fundamental Economic Concept Lost in Translation"] by Predrag Rajsic, February 2011		* [http://www.mises.ca/posts/articles/fundamental-economic-concept-lost-in-translation/ "Fundamental Economic Concept Lost in Translation"] by Predrag Rajsic, February 2011
	* [http://www.youtube.com/watch?v=y0gGyeA-8C4&feature=player_embedded Trade is Made of Win, Part 1: Wealth Creation]		* {{md\|6342\|Understanding Comparative Advantage\|Stanley Schmidt\|February 2013}} (from the textbook ''"Life of Fred: Pre-Algebra II with Economics"'')
	* [http://www.youtube.com/watch?v=7yOHjRThM_o&feature=player_embedded Trade is Made of Win, Part 2: Cooperation]		* [http://www.youtube.com/watch?v=y0gGyeA-8C4&feature=player_embedded Trade is Made of Win, Part 1: Wealth Creation] (video)
	* [http://www.youtube.com/watch?v=qdcQLWGaJoM&feature=player_embedded Trade is Made of Win, Part 3: Conservation]		* [http://www.youtube.com/watch?v=7yOHjRThM_o&feature=player_embedded Trade is Made of Win, Part 2: Cooperation] (video)
			* [http://www.youtube.com/watch?v=qdcQLWGaJoM&feature=player_embedded Trade is Made of Win, Part 3: Conservation] (video)

	[[Category:Economic concepts]]		[[Category:Economic concepts]]

77.185.245.60: Undo revision 22338 by 194.27.77.3 (talk)

2013-02-22T07:38:04Z

Undo revision 22338 by 194.27.77.3 (talk)

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	'''Comparative Advantage''' refers to ~~Devraj~~ the ability of an entity (individual, company, or country) to produce a [[good]] or service at a lower [[opportunity cost]] than another one. It is the ability to produce a product with a higher ''relative'' efficiency than one's trading partner, given all the other products that could be produced. It can be contrasted with [[Absolute Advantage]] which refers to the ability of one to produce a particular good or service at a lower absolute cost than another.		'''Comparative Advantage''' refers to the ability of an entity (individual, company, or country) to produce a [[good]] or service at a lower [[opportunity cost]] than another one. It is the ability to produce a product with a higher ''relative'' efficiency than one's trading partner, given all the other products that could be produced. It can be contrasted with [[Absolute Advantage]] which refers to the ability of one to produce a particular good or service at a lower absolute cost than another.

	'''Comparative Advantage''' is also know as '''comparative cost''', '''the law of association''' or the '''Ricardian Law of Association'''.<ref name="Mises_law_of_association"></ref>		'''Comparative Advantage''' is also know as '''comparative cost''', '''the law of association''' or the '''Ricardian Law of Association'''.<ref name="Mises_law_of_association"></ref>

194.27.77.3 at 23:55, 21 February 2013

2013-02-21T23:55:03Z

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	'''Comparative Advantage''' refers to the ability of an entity (individual, company, or country) to produce a [[good]] or service at a lower [[opportunity cost]] than another one. It is the ability to produce a product with a higher ''relative'' efficiency than one's trading partner, given all the other products that could be produced. It can be contrasted with [[Absolute Advantage]] which refers to the ability of one to produce a particular good or service at a lower absolute cost than another.		'''Comparative Advantage''' refers to Devraj the ability of an entity (individual, company, or country) to produce a [[good]] or service at a lower [[opportunity cost]] than another one. It is the ability to produce a product with a higher ''relative'' efficiency than one's trading partner, given all the other products that could be produced. It can be contrasted with [[Absolute Advantage]] which refers to the ability of one to produce a particular good or service at a lower absolute cost than another.

	'''Comparative Advantage''' is also know as '''comparative cost''', '''the law of association''' or the '''Ricardian Law of Association'''.<ref name="Mises_law_of_association"></ref>		'''Comparative Advantage''' is also know as '''comparative cost''', '''the law of association''' or the '''Ricardian Law of Association'''.<ref name="Mises_law_of_association"></ref>

Huckelberry: /* Assumptions */ Fixing Boldness to follow wikipedia conventions

2011-11-06T17:01:51Z

Assumptions: Fixing Boldness to follow wikipedia conventions

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	==Assumptions==		==Assumptions==

	Comparative cost between countries is true under the assumption that capital and labor are immobile.<ref name="Ricardo_comparative_advantage"></ref><ref name="Mises_law_of_association"></ref> After Ricardo's publication, labor and capital increased in mobility, and countries with absolute advantages saw increases in migration and capital movements in the late 1800's. Towards the late 20th century capital and labor increasingly become less mobile. The mobility labor and capital can make it more advantageous for labor and capital to migrate in the case of [[absolute advantage]] rather than stay and trade under conditions of [[comparative advantage]].<ref name="Mises_law_of_association_ce">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap8sec4.asp VIII. Human Society], 4. The Ricardian Law of Association: ''Current Errors Concerning the Law of Association'', [[Human Action]], online version, referenced 2011-02-07.</ref>		Comparative cost between countries is true under the assumption that capital and labor are immobile.<ref name="Ricardo_comparative_advantage"></ref><ref name="Mises_law_of_association"></ref> After Ricardo's publication, labor and capital increased in mobility, and countries with absolute advantages saw increases in migration and capital movements in the late 1800's. Towards the late 20th century capital and labor increasingly become less mobile. The mobility labor and capital can make it more advantageous for labor and capital to migrate in the case of [[absolute advantage]] rather than stay and trade under conditions of comparative advantage.<ref name="Mises_law_of_association_ce">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap8sec4.asp VIII. Human Society], 4. The Ricardian Law of Association: ''Current Errors Concerning the Law of Association'', [[Human Action]], online version, referenced 2011-02-07.</ref>

	==References==		==References==

Huckelberry: /* Examples */

2011-11-06T17:00:30Z

Examples

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	==Examples==		==Examples==
	In addressing the "paradox" where it is worthwhile for a country with [[absolute advantage]] to trade with a country who has ''absolute disadvantage (i.e., is more efficient in nothing)'', [[Paul Samuelson]] writes:		In addressing the "paradox" where it is worthwhile for a country with [[absolute advantage]] to trade with a country who has absolute disadvantage (i.e., is more efficient in nothing), [[Paul Samuelson]] writes:

	<blockquote>		<blockquote>
	A traditional example used to illustrate this paradox of comparative advantage is the case of the best lawyer in town who is also the best typist in town. Will she not specialize in law and leave typing to a secretary? How can she afford to give up precious time from the legal field, where her comparative advantage is very great, to perform typing activities in which she is efficient but in which she lacks ''comparative'' advantage? Or look at it from the secretary's point of view. She is less efficient than the lawyer in both activities; but her relative disadvantage compared with the lawyer's is least in typing. Relatively speaking, the secretary has a ~~'''~~comparative advantage~~'''~~ in typing.<ref name="samelson_comparative_advantage">[[Paul Samuelson]], ''Economics'' (McGraw-Hill, 1973) p. 669</ref></blockquote>		A traditional example used to illustrate this paradox of comparative advantage is the case of the best lawyer in town who is also the best typist in town. Will she not specialize in law and leave typing to a secretary? How can she afford to give up precious time from the legal field, where her comparative advantage is very great, to perform typing activities in which she is efficient but in which she lacks ''comparative'' advantage? Or look at it from the secretary's point of view. She is less efficient than the lawyer in both activities; but her relative disadvantage compared with the lawyer's is least in typing. Relatively speaking, the secretary has a comparative advantage in typing.<ref name="samelson_comparative_advantage">[[Paul Samuelson]], ''Economics'' (McGraw-Hill, 1973) p. 669</ref></blockquote>

	==The Meaning of Comparative Advantage==		==The Meaning of Comparative Advantage==

Huckelberry: /* Origins and Original Example */

2011-11-06T16:58:57Z

Origins and Original Example

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	==Origins and Original Example==		==Origins and Original Example==

	In ''[[Principles of Political Economy and Taxation]]'', [[David Ricardo]] uses the example of wine production in [[Portugal]] and cloth production in [[England]] to illustrate ~~'''~~comparative advantage~~'''~~. [[England]] can produce a certain quantity of cloth with 100 men for one year or a certain quantity of wine with 120 men in the same time. [[Portugal]], on the other hand, may only require 90 men for one year to produce the same quantity of cloth and 80 men for one year to produce the wine. [[Portugal]], in [[Richardo's]] example, has an [[absolute advantage]]: it makes both wine and cloth more efficiently than [[England]]. Yet, [[Ricardo]] concludes:		In ''[[Principles of Political Economy and Taxation]]'', [[David Ricardo]] uses the example of wine production in [[Portugal]] and cloth production in [[England]] to illustrate comparative advantage. [[England]] can produce a certain quantity of cloth with 100 men for one year or a certain quantity of wine with 120 men in the same time. [[Portugal]], on the other hand, may only require 90 men for one year to produce the same quantity of cloth and 80 men for one year to produce the wine. [[Portugal]], in [[Richardo's]] example, has an [[absolute advantage]]: it makes both wine and cloth more efficiently than [[England]]. Yet, [[Ricardo]] concludes:

	<blockquote>Though [Portugal] could make cloth with the labor of 90 men, she would import it from a country where it requires the labor of 100 men to produce it, because it would be advantageous to her rather to employ her capital in production of wine, for which she would obtain more cloth from [[England]], than she could produce by diverting a portion of her capital from cultivation of vines to the manufacture of cloth.<ref name="Ricardo_comparative_advantage">[[David Ricardo]] [[Principles of Political Economy and Taxation]], VII. On Foreign Trade, (Amherst, New York: Prometheus Books) 94-95</ref></blockquote>		<blockquote>Though [Portugal] could make cloth with the labor of 90 men, she would import it from a country where it requires the labor of 100 men to produce it, because it would be advantageous to her rather to employ her capital in production of wine, for which she would obtain more cloth from [[England]], than she could produce by diverting a portion of her capital from cultivation of vines to the manufacture of cloth.<ref name="Ricardo_comparative_advantage">[[David Ricardo]] [[Principles of Political Economy and Taxation]], VII. On Foreign Trade, (Amherst, New York: Prometheus Books) 94-95</ref></blockquote>

24.121.217.254: /* Assumptions */

2011-09-21T16:49:02Z

Assumptions

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	==Assumptions==		==Assumptions==

	Comparative cost between countries is true under the assumption that capital and labor are immobile.<ref name="Ricardo_comparative_advantage"></ref><ref name="Mises_law_of_association"></ref>After ~~his~~ publication labor and capital increased in mobility, and countries with absolute advantages saw increases in migration and capital movements in the late 1800's. Towards the late 20th century capital and labor increasingly become less mobile. The mobility labor and capital can make it more advantageous for labor and capital to migrate in the case of [[absolute advantage]] rather than stay and trade under conditions of [[comparative advantage]].<ref name="Mises_law_of_association_ce">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap8sec4.asp VIII. Human Society], 4. The Ricardian Law of Association: ''Current Errors Concerning the Law of Association'', [[Human Action]], online version, referenced 2011-02-07.</ref>		Comparative cost between countries is true under the assumption that capital and labor are immobile.<ref name="Ricardo_comparative_advantage"></ref><ref name="Mises_law_of_association"></ref> After Ricardo's publication, labor and capital increased in mobility, and countries with absolute advantages saw increases in migration and capital movements in the late 1800's. Towards the late 20th century capital and labor increasingly become less mobile. The mobility labor and capital can make it more advantageous for labor and capital to migrate in the case of [[absolute advantage]] rather than stay and trade under conditions of [[comparative advantage]].<ref name="Mises_law_of_association_ce">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap8sec4.asp VIII. Human Society], 4. The Ricardian Law of Association: ''Current Errors Concerning the Law of Association'', [[Human Action]], online version, referenced 2011-02-07.</ref>

	==References==		==References==

207.224.19.150 at 21:28, 29 August 2011

2011-08-29T21:28:00Z

← Older revision		Revision as of 21:28, 29 August 2011
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	'''Comparative Advantage''' refers to the ability of an entity (individual, company, or country) to produce a [[good]] or service at a lower [[opportunity cost]] than another one. It is the ability to produce a product with ~~an highest~~ ''relative'' efficiency than one's ~~trade~~ partner, given all the other products that could be produced. It can be contrasted with [[Absolute Advantage]] which refers to the ability of one to produce a particular good or service at a lower absolute cost than another.		'''Comparative Advantage''' refers to the ability of an entity (individual, company, or country) to produce a [[good]] or service at a lower [[opportunity cost]] than another one. It is the ability to produce a product with a higher ''relative'' efficiency than one's trading partner, given all the other products that could be produced. It can be contrasted with [[Absolute Advantage]] which refers to the ability of one to produce a particular good or service at a lower absolute cost than another.

	'''Comparative Advantage''' is also know as '''comparative cost''', '''the law of association''' or the '''Ricardian Law of Association'''.<ref name="Mises_law_of_association"></ref>		'''Comparative Advantage''' is also know as '''comparative cost''', '''the law of association''' or the '''Ricardian Law of Association'''.<ref name="Mises_law_of_association"></ref>

John James: /* Links */ added

2011-08-24T16:31:50Z

Links: added

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	* [http://www.econlib.org/library/Ricardo/ricP.html ''On the Principles of Political Economy and Taxation''], by David Ricardo. Complete, fully-searchable text at the Library of Economics and Liberty.		* [http://www.econlib.org/library/Ricardo/ricP.html ''On the Principles of Political Economy and Taxation''], by David Ricardo. Complete, fully-searchable text at the Library of Economics and Liberty.
	* [http://web.mit.edu/krugman/www/ricardo.htm Ricardo's Difficult Idea]		* [http://web.mit.edu/krugman/www/ricardo.htm Ricardo's Difficult Idea]
	* ~~[http://mises.org/daily/~~3744 Tire Trade Tirade]		* {{md\|3744\|Tire Trade Tirade\|[[Art Carden]]\|October 2009}}
	* ~~[http~~:~~//blog.mises.org/~~13753~~/gains-from-trade-with-extreme-differences/~~ Gains From Trade With Extreme Differences]		* {{mb\|13752\|Gains From Trade: An Example\|Art Carden\|September 2010}}
	* [http://~~blog~~.mises.~~org~~/~~13752~~/~~gains~~-~~from~~-~~trade~~-an-~~example~~/ ~~Gains From Trade: An Example~~]		* {{mb\|13753\|Gains From Trade With Extreme Differences\|Art Carden\|September 2010}}
			* {{mb\|3386\|comparative advantage versus absolute advantage\|Gil Guillory\|March 2005}}
			* {{md\|3015\|Cooperation: How a Free Market Benefits Everyone\|[[Jeffrey Tucker\|Jeffrey A. Tucker]]\|June 2008}}
			* [http://www.mises.ca/posts/articles/fundamental-economic-concept-lost-in-translation/ "Fundamental Economic Concept Lost in Translation"] by Predrag Rajsic, February 2011
	* [http://www.youtube.com/watch?v=y0gGyeA-8C4&feature=player_embedded Trade is Made of Win, Part 1: Wealth Creation]		* [http://www.youtube.com/watch?v=y0gGyeA-8C4&feature=player_embedded Trade is Made of Win, Part 1: Wealth Creation]
	* [http://www.youtube.com/watch?v=7yOHjRThM_o&feature=player_embedded Trade is Made of Win, Part 2: Cooperation]		* [http://www.youtube.com/watch?v=7yOHjRThM_o&feature=player_embedded Trade is Made of Win, Part 2: Cooperation]