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 incentivize countries to produce goods in which they have a comparative advantage, as it allows them to maximize their profit by reducing costs and enlarging their potential market through trade.

Step-by-step solution

Definition of Comparative Advantage

The first step is to define comparative advantage. It is a concept in economics, which refers to the ability of a country to produce a particular good or service at a lower opportunity cost than other countries. This means that the country can produce the good or service using less resources or at a lower cost than others.

Explaining the relevance of Profit

The second step is to explain how profit plays a role in this. Profit is a key incentive for any business or country involved in production. If a country has a comparitive advantage in producing a good, it implies they can do it at a cheaper cost, hence, potentially increasing their profit if they choose to produce and possibly trade that good.

Linking Profit and Comparative Advantage

To complete the explanation, link the concept of profit with comparative advantage. When a country realizes that it can produce certain goods at a cheaper cost than others due to their comparative advantage, this means that they could potentially get greater profits by specializing in the production of these goods and then trading for other goods with other countries.

Final Summary

Finally, we could say that the desire for profit could indeed push countries toward producing goods in which they have a comparative advantage. It is because by doing so, they can maximize their profit by reducing costs due to lower opportunity costs and can also cater to a larger market by trading with countries that lack this advantage in producing the same goods.