Problem
The US trades with almost every country in the world. We run a trade deficit with some of our partner countries and a trade surplus with others. In 2018, the U.S. had a $419 billion trade deficit with China, mainly from importing computers and electronics. On the other hand, the U.S. has a $19 billion trade surplus with the UK, mainly from exporting aircraft and heavy machinery.
1) Explain the law of comparative advantage and the difference between comparative and absolute advantage.
2) Identify one reason we trade with the countries mentioned above and all other countries.
3) Describe some of the comparative advantages we have over the UK and China.
4) What do you feel are some of the UK's comparative advantages over the US? What about China's?
5) How do these comparative advantages affect the types of jobs we outsource?