Question

Describe comparative advantage theory and gravity model theory. give examples.

Describe comparative advantage theory and gravity model theory. give examples.

Homework Answers

Answer #1

Comparative advantage: A country has a comparative advantage over another if it can produce a certain product or a commodity, at a lower opportunity cost than the other country

Example Country A produces 5 ice creams  and 5 shoes/ hour
- Country 2 produces 4 ice creams and 2 shoes/ hour
Country 2 can gain comparative advantage by producing ice creams and shoes at a lower cost.

gravity model theory.-: Gravity model shows the Interaction is proportional to the multiplication of the two populations divided by the distance between them

xample: The gravity model explains why the trade between russia and germany exceeds that between russia and portugal

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Using examples, discuss and illustrate the keystone of international trade, the theory of comparative advantage.
Using examples, discuss and illustrate the keystone of international trade, the theory of comparative advantage.
What is the difference between Ricardo’s theory of comparative advantage and the HeckscherOhlin theory of comparative...
What is the difference between Ricardo’s theory of comparative advantage and the HeckscherOhlin theory of comparative advantage? Do they lead to different conclusions? Explain.
Give 2 reasons why the theory of comparative advantage is not fully applicable Name 3 advantages...
Give 2 reasons why the theory of comparative advantage is not fully applicable Name 3 advantages Boeing gains by globalizing and being a Multinational Enterprise.
what are the theories of comparative advantage and absolute advantage? Given examples.
what are the theories of comparative advantage and absolute advantage? Given examples.
Thoroughly explain the theory of Comparative Advantage, and criticism of the theory as expressed by the...
Thoroughly explain the theory of Comparative Advantage, and criticism of the theory as expressed by the mercantilist perspective.
Discussion Questions: What is absolute advantage in trade theory? What is the comparative advantage on international...
Discussion Questions: What is absolute advantage in trade theory? What is the comparative advantage on international trade? How does absolute and comparative advantage lead to specialization? What are the benefits of comparative advantage?
Draw diagrams and explain in detail. a. Compare the Theory of Comparative Advantage with the Neo...
Draw diagrams and explain in detail. a. Compare the Theory of Comparative Advantage with the Neo Classical Theory. Explain the Autarky and Free Trade situations in both; give diagrams and explain what happens when the country moves from Autarky to Free Trade. b. Are there any gains from trade in both these theories? If yes, please give details.
Question 6:    What is the theory of comparative advantage? Question 7:      Name 4 key limitations to...
Question 6:    What is the theory of comparative advantage? Question 7:      Name 4 key limitations to the theory of comparative advantage.
Establish the differences between mercantilism, absolute advantage, comparative advantage, heckscher-ohlin theory, monopoly, and oligopoly.
Establish the differences between mercantilism, absolute advantage, comparative advantage, heckscher-ohlin theory, monopoly, and oligopoly.
What are the differences between the three theories of international business? (Theory of Comparative Advantage -...
What are the differences between the three theories of international business? (Theory of Comparative Advantage - Imperfect Markets Theory - Product Cycle Theory)