Discuss in brief the absolute comparative cost advantage theory

How would you define it in the spectrum of the Hong Kong media? For some, independence means taking no stance. But we can't take this approach. Many media organisations have leaned towards Beijing, while some have become the voice of the government.

Discuss in brief the absolute comparative cost advantage theory

Businesses need to respond to a variety of changes: Social changes In the 19th century, the majority of people lived in small rural communities, with high cost of goods to small scattered stores.

Montgomery Ward operated a mail order service, delivering products at lower costs than those charged by rural stores.

Discuss in brief the absolute comparative cost advantage theory

But as urbanization happened in the s, urban department stores became more efficient, leading to the rise of JC Penney. Economic changes Technological changes Rockefeller produced new products from petroleum, extracting more value and reducing the price of its main product kerosene, instead of letting it go to waste.

Newspapers were the primary means of disseminating news, until the Internet made them largely obsolete. Digital cameras made film photography like with Kodak obsolete. Ironically, Kodak invented the digital camera. Business model changes With the rise of credit cards, retailers often ended up making more profits from managing their own credit card programs than from retail.

Changes in business leadership Often companies fail to adapt because their calcified ways of doing things are not efficient at producing the new type of product people want. Specialization and Middlemen A company is limited in the range of functions it can perform efficiently.

Only a certain number of links in the value chain can be mastered and operated efficiently by the same set of people. General Motors is excellent at making automobiles, but it leaves tire manufacturing and car sales to others.

Compared to local dealerships, it is too much for GM to track local conditions across the United States, decide where a lease location is most effective, understand the trade-in value of a Honda in Seattle vs Miami, etc. Middlemen exist when they can do their part of the chain more efficiently than others can.

Eyewear brand Warby Parker sells direct to consumers using the Internet as distribution instead of paying for presence in retail stores, thus cutting out a middleman like Sunglass Hut. Conversely, tech companies used to build and manage their own computer servers at great expense, but now have largely outsourced to convenient providers like Amazon Web Services.

Instead of ten farmers taking time off to carry their produce to town for sale, one middleman collects the produce of many farmers and drives it to a buyer. In contrast, in the US, a farmer may own vehicles and siloes that are so efficient they make a middleman unnecessary.


Society as a whole saves on the amount of resources required to get the produce on the market, with the cost being the profit made by the middleman. Similarly, in developing countries, there are often more middlemen between the manufacturer of goods and the consumer.

The limiting factor here is the poverty of the consumer, who can buy much less at once. In Africa you might see small traders sitting with their wares outside retail stores, selling volumes as small as half a cigarette.

Here, the store owner clearly sees it as less efficient to break down their packaged goods into minute quantities and to handle tiny transactions, and is thus content to outsource that consumer need to a middleman.

Higher in the chain, it is not efficient for Nabisco or Philip Morris to break down their pallets into individual-cigarette sized packages.

Absolute Advantage

In more prosperous countries, technology would reduce the number of middlemen, with each producer producing more output, storing it more efficiently, and transporting a greater volume on highways; and with each consumer buying more at once.

Peak Capacity In industries with fluctuating demand, enterprises often need to reserve enough capacity to handle peak volume, which means there is excess capacity at non-peak times.

In non-peak times, prices will lower to attract budget-conscious consumers — like cruise ships offering reduced fares in the off season.

Budget-conscious travelers tend to prebook in advance to lock in rates, leaving the higher-priced hotels more subject to fluctuations. When travel reduced inluxury hotels had to discount their goods to fill excess capacity.

For efficiency, ideally the toll should increase in peak demand times and be costless in other times, shifting demand to other hours. This would smoothen out demand and even reduce the amount of capacity required, lowering the cost of construction. However, politically these efforts are unpopular, given the number of toll payers who would be disadvantaged.

Inventory is a substitute for knowledge — if a factory knew exactly what parts were needed at what times, there would be no inventory needed. They can rely on this because of high reliability from upstream manufacturers and delivery services, who themselves compete on quality and price in the market economy.

Reliability is a matter of economic life and death for vendors. When the suppliers are unreliable, it makes sense to keep a larger inventory and even manufacture your own components, to guarantee your output.

Discuss in brief the absolute comparative cost advantage theory

This leads to waste of scarce resources. In the Soviet Union, state-run enterprises often provided unreliable service and poor quality. In turn, private enterprises, with little profit incentive to force down costs while having strict quotas to meet, often made their own components.

Here maintaining large inventories is necessary, but adds inventory costs and reduces standard of living. Sometimes economic uncertainty, like in recessions, leads companies to draw down their inventory instead of maintaining a constant inventory:I have heard the following from a bunch of people, one of whom was me six months ago: “I keep on reading all these posts by really smart people who identify as Reactionaries, and I .

The final episode starts with the death of Kim Jong Il and the rise of the new leader of North Korea — his son, Kim Jong Un, taking power at the age of torosgazete.com has been an NCCRS member since October The mission of torosgazete.com is to make education accessible to everyone, everywhere.

Students can save on their education by taking the torosgazete.com online, self-paced courses and earn widely transferable college credit recommendations for a fraction of the cost of a traditional course. ABSTRACT. The paper has two objectives. The first is to discuss whether developing countries can benefit by specializing according to their comparative advantage.

People and ideas systems As outlined by Andrew Roberts of Middlesex University, London. Introductory sketches of the ideas of theorists, linked to Andrew Roberts' book Social Science History and the Society and Science History torosgazete.comped from a course document "Outline of the theorists we could cover" (February ), the web page was created offline before This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm.

Comparative Advantage Versus Absolute Advantage | Globalization