Question

The desire for profit can end up pushing countries toward producing goods in which they have a comparative advantage. Do you agree or disagree? Explain your answer.

Short answer

Yes, the desire for profit can indeed push countries towards producing goods in which they have a comparative advantage. This is because the lower opportunity cost allows them to make maximum profits by focusing on the goods they can produce more efficiently than other countries.

Step-by-step solution

Understanding Comparative Advantage

A country has a comparative advantage at producing something if it can produce it at lower cost than anyone else. Having a comparative advantage is not the same as being the best at something. It is about being able to produce a good or service at a lower opportunity cost, not necessarily at absolute efficiency.

Assessing the Role of Profit Motive

The profit motive is a key driving force in capitalist economies. It motivates companies and countries to produce goods and services they are most efficient at. If a country has a comparative advantage in producing a certain good, it means it can produce that good at a lower opportunity cost. With the desire for profit, countries may be inclined to produce and export these goods since it can be more profitable.

Formulating your Response

Based on the understanding of comparative advantage and the role of profit desire, formulate a response. Do remember that any viewpoint should be justified and clearly supported.