Example:Absolute advantage Now assume complete specialization. Wind turbines Cars Denmark 10×6=60 0X2=0 Germany 0X3= 0 10X6=60 Total 60 60
Example: Absolute advantage Now assume complete specialization. Wind turbines Cars Denmark 10 x 6 = 60 0 x 2 = 0 Germany 0 x 3 = 0 10 x 6 = 60 Total 60 60
Example:Comparative advantage The table shows the production capacity per production unit. Germany has an absolute advantage in producing both wind turbines and cars. 袋 Germany has a comparative advantage in producing cars. Wind turbines Cars Denmark 2 2 Germany 3 6
Example: Comparative advantage The table shows the production capacity per production unit. Germany has an absolute advantage in producing both wind turbines and cars. Germany has a comparative advantage in producing cars. Wind turbines Cars Denmark 2 2 Germany 3 6
Example:Comparative advantage Denmark uses 3 production units to produce wind turbines and 7 production units to produce cars. Assume the same for Germany. Wind turbines Cars Denmark 3 x 2 6 7×2=14 Germany 3 x 3 9 7×6=42 Total 15 56
Example: Comparative advantage Denmark uses 3 production units to produce wind turbines and 7 production units to produce cars. Assume the same for Germany. Wind turbines Cars Denmark 3 x 2 = 6 7 x 2 = 14 Germany 3 x 3 = 9 7 x 6 = 42 Total 15 56
Example:Comparative advantage Now assume complete specialization. Wind turbines Cars Denmark 10×2=20 0X2=0 Germany 0X3= 0 10X6=60 Total 20 60
Example: Comparative advantage Now assume complete specialization. Wind turbines Cars Denmark 10 x 2 = 20 0 x 2 = 0 Germany 0 x 3 = 0 10 x 6 = 60 Total 20 60
The Balance of Payments International business transactions occur in many different forms over the course of a year The measurement of all international economic transactions between the residents of a country and foreign residents is called the balance of payments (BOP)
The Balance of Payments International business transactions occur in many different forms over the course of a year The measurement of all international economic transactions between the residents of a country and foreign residents is called the balance of payments (BOP)