“The United States can make certain toys with greater productive efficiency than can China. Yet we import those toys from China.” Relate your answer to the ideas of Adam Smith and David Ricardo.
I need a short essay on this question here. Following is what I know;
The United States can make toys more efficiently than can China, but it would also cost more to produce. Adam Smith’s idea basically states “Never attempt to make at home what will cost you more to make than to buy. If a foreign country can supply us with a commodity cheaper than we can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage (McConnell, Brue, & Flynn, 2011, p. 757).” David Ricardo extended Smith’s idea by demonstrating that it is advantageous for a country to specialize and trade with another country even if it is more productive in all economic activities than that other country (McConnell, Brue, & Flynn, 2011, p. 757). So, stated in these two ideas, the United States is better off to buy the cheaper toys from China because firstly, it is cheaper, and secondly because we can benefit in some way from trade.
The United States can make more and better toys with greater productivity than China can yetthe United States of America still chooses to import toys from china. In production a nation maychose…