Absolute and Comparative Advantage

The definition of comparative advantage is simple it is the ability of a country to produce goods and services at a lower cost than other countries. Comparative advantage explains why countries produce different goods and services. Countries are better off when they specialize in producing goods and services for which they have a comparative advantage. These countries can now trade for goods and services for which other countries have a comparative advantage. Countries usually have an absolute advantage when they have the ability to produce goods and service than other countries having to use the same amount of resources. An example of absolute advantage can be that one country being able to produce more coffee than other countries using almost the same resources.

Evaluate the effects of government policy on economic behavior

The Government will always be involved in our Economy. Government policies affect how people make their economic decisions. Policies of Government are inscriptured as to what people need and how government can stay afloat in the aspects of money basically keep a flow going. An aspect that government policies have in our fiscal policy is that changes in our taxes are for one result only and that is to succeed in macroeconomic policies. The government officials who make these policies are to focus on making more employment, having production and of course the use of power. When more people are employed the more they will purchase thing and help the economy. Which means more production which means more jobs which means more buyers and the cycle goes on. The government will regulate taxes, laws, and tariffs that will calculate how products are selling and what is being bought by public and figure out what else people need. For example people who buy alcoholic beverages the government has control on the taxes they put in them because yes they are fun but can also cause hazards to one self and others it’s almost like a deadly weapon. That...