Question: a. Explain the difference between comparative and absolute advantage. b. Consider the following example. Imagine that the US can produce a unit of steel for

a. Explain the difference between comparative and absolute

advantage.

b. Consider the following example.

  • Imagine that the US can produce a unit of steel for $2 and a unit

of soya beans for $3. China can produce a unit of steel for $1 and a unit of soya beans for $2

Who has comparative and who has an absolute advantage? Why?

  • What would be the effect of the US imposing an import quota on

Chinese steel?

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