Even though the U.S. has enough resources that can be used to meet American needs, countries such as China, Mexico, and others present an opportunity to produce for less. In this regard, American firms and entities benefit immensely by importing products and services from other countries because of the low cost of production, which widens their profit margins. Notably, the theory of comparative advantage highlights the benefits countries such as the U.S. can accrue by producing specific goods and services in foreign nations. From this realization, opportunity cost plays a vital role in America’s importing business because of its ability to present different production options to firms and established firms.
Labour laws in different countries influence the high number of imports in the U.S. than exports. For instance, Indian tech firms pay their professionals about $7,000 a year, lower than the American minimum wage (Gulley, Nassar, & Xun, 2018). In this regard, many firms in the U.S. are likely to outsource tech support from the Indian market, allowing them to widen their profit margin and overall revenue scope. However, critics urge consumers to purchase items “Made in America,” forgetting that individuals are unwilling to buy things at a higher cost when viable options can be acquired at a lower price.
Opportunity cost plays a vital role in America’s importing business because of its ability to present different production options to firms and established firms. In this case, American imports are part of the country’s balance of payments and demonstrate the country’s transactional record within a fixed period. The low cost of production in emerging markets presents an opportunity for American firms to widen their profit margins and gain a competitive edge over other industry players in the global market.