An Example of Absolute Advantage

Topics: Supply and demand, Economics, United States dollar Pages: 2 (396 words) Published: October 22, 2010
An example of absolute advantage:
An African mining company in Lagos Nigeria is the only mine where this particular diamond is found. The African mining company ships this diamond to diamond jewelry companies all over the world. Other countries would not have this diamond if the Nigerian mining company did not mine and ship it to them. An example of comparative advantage:

A Japanese company will manufactures audio and video machines below labor price and cost. They don’t have to manufacture them at the same quality as their competitor in Germany with their high tech audio and video machines, high labor cost and price. Since Japan can manufacture the product with low labor cost and price they have the competitive advantage over Germany and other countries. An example of National Comparative advantage:

Chinese children as young as 9 years old will work full-time in garment factories to help their families with food and shelter. The United States Child Labor Laws state a child must be at least 14 years old and can only work part-time. However, the United States has no control over children in China, because this is the Chinese way of life and culture. Real life examples of competitive advantage:

Southwest Airlines allows their passenger’s luggage to fly free on all their flights with a purchase of a First or Economy Class ticket, whereas Frontier Airline charges their passengers twenty dollars for the first piece of luggage and twenty-five dollars each piece additional piece of luggage to fly on their Airline no matter what type of ticket you purchage. Verizon Wireless offers their customers a two year contract with heavy financial penalties for early termination of their service, whereas, Cricket Wireless offers their customers a pay as you go contract without any financial penalties for early termination of their service. The laws of supply and demand will dictate how the currency exchange rates affect the forms of competitive...
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