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Mathematics & Economics
English (U.S.)
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Factors of production & comparative advantages (Essay Sample)

Please answer the following question for me. China and Japan have two factors of production, land and labor. Both countries produce two goods, corn, which requires more land, and computers, which requires more labor. Given that China is abundant in land and Japan is abundant in labor, what will be the effect on the terms of trade an increase in Japan's labor supply? What will be the welfare effect of a decrease in land used for corn in China? source..

Running Head: Factors of production & comparative advantages
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China and Japan have an absolute advantage in the production of one commodity against the other. For instance, in the case of Japan production of computers will be much cheaper as there is available of labour and within reach. This minimizes the additional costs in which the country may incur when importing labour. In the case of China, it is advantageous to produce corn as the land required for the crop cultivation is available. As bought countries specializes in the commodity in which it has absolute advantage, the...
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