Canada's Comparative Advantage

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Comparative advantage is the idea that one party will almost always have an advantage in producing a certain good over another party due to the opportunity cost of the aforementioned good. This reality is often simulated with a simplistic representation of two parties with two goods to produce, for example two people stuck on a desert island with two goods such as coconuts and fish. Now one of the people, let's call him Bill might be able to produce 7 fish max, if all their resources are put towards fish, and 14 coconuts max if all their resources were put towards coconuts, while the other, let's call him Ted, could produce 4 fish and 5 coconuts respectively. Now If we compare the production abilities of the two people we see that the Bill …show more content…
Canada does compete because the oil market is not a closed economic system such as the market on Bill and Ted’s island, instead it is a market with enough players that it is still economically viable to produce oil due to a Canada having advantages over other countries that it might lack with Kuwait, like shear quantity. If Canada were to pursue an economic policy of comparative advantage it might push its companies to work towards things Canada can produce with less opportunity costs than other countries like maple syrup or hockey players. Since Canada economically should act as rational maximizer, it would in fact be counter to this nature to only support products in which Canada has a Comparative advantage, because it would not lead to the greatest amount of utility (economic growth/profits/money) for Canada. Along with Canada trying to maximize utility, there are the firms within Canada like