International Trade

Activity Worksheet
Name Bicalas, Dela Cruz, Maquirang, Mercado, Valdez
Section BUSMAN109 B
Mini Case Study: “absolute advantage”

Mini Case questions:

1. What is the Absolute Advantage of U.S. in terms of producing car
against Brazil? And what is the absolute of Brazil over U.S. in terms of
producing bananas?
The U.S. has a great advantage in terms of producing cars against
Brazil because they place 4th out of 78 countries in terms of
technological expertise. Their country is the second-largest car producer
in the world, next to China. They have manufactured more than 1.5
million cars and 7.6 million commercial vehicles all together.
Brazil is more advantageous than the U.S. when it comes to the
production of bananas on the other hand because of its tropical climate
which is best for producing bananas. They are the 4 th best producers of
bananas worldwide. They produce around 6.5 to 7.5 million tons of
bananas every year and make an estimate of around 26.11 million dollars
from exports alone.
2. What country will you invest for Cars? Bananas? Justify Why?

I would invest in cars from the United States and bananas from Brazil
simple because each country has absolute advantage at manufacturing
these products. The US is clearly ahead in terms of producing cars
compared to Brazil, and Brazil is ahead in terms of producing bananas.
DJM

I will invest in a country that provides efficient production of goods and

services. Based on the data above, I’ll invest in cars in the US and
bananas in Banana. The US was considered the top producer of cars
and was the second-largest car manufacturer in the world. The United
States produces almost twice as many commercial vehicles as any other
country. And for Brazil, which is also known as South America's
largest banana producer. According to the New Yorker Magazine,
banana plants require at least fourteen months of frost-free weather to
bear fruit, which is why they are not grown commercially in the United
States. So I would rather spend it on something that will also benefit
me. Not only that, but analyzing the data above, we can clearly say that
we must invest in a country where they are capable of producing and
where they have an absolute advantage. FJV

I will invest in the US for cars because it has an absolute advantage in

producing cars since their output per worker in one year is 5 compared
to Brazil's 2. For the bananas, I will invest in Brazil because Brazil has
an absolute advantage in terms of producing Bananas which is 8
compared to US which is 1. JZDC

I will invest in a country for their goods or services offered/rendered

depending on their production capabilities. As The US is superior in
producing cars, naturally i would invest in the US for the said product
and Vice Versa for Brazil with bananas. As it can be seen from the
information above that the countries have comparative advantages, it is
logical to invest in them according to their capacity to produce to avoid
a shortage and ensure quality products resulting in many advantages of
our own like broader Market Exposure. MJM

As investors, it is important to choose a country that is more capable of

producing goods/services. Given the data above, it can be clearly
determined as to which country is best to invest cars and banana. I
would rather invest cars in the US since they are more capable of
producing more quantity than Brazil in a year. As for the banana, it
would be best to invest in Brazil since the production of the good in
that country is higher than the US. JLB