Jim Whitney   March 16, 2011

The Ricardian trade model and comparative advantage

  Efficiency information Opportunity cost information
Output (Q) per hour  Labor time (minutes) per unit Opportunity cost of each...
Country name  Razors (R) Wigs (W) Razors (R) Wigs (W) Razor (R) Wig (W)
C1:            
C2:            
C3:            
C4:            

COUNTRIES 1 AND 2:
Comparative efficiency:
Mark the information which correctly completes these sentences:
Compared to country 2, country 1 has its biggest efficiency advantage in razors.
smallest efficiency disadvantage wigs.
Compared to country 1, country 2 has its biggest efficiency advantage in razors.
smallest efficiency disadvantage wigs.

Comparative opportunity costs:
Comparing 1 and 2: which country has the lower opportunity cost for producing razors? ______
                               which country has the lower opportunity cost for producing wigs?   ______
Absolute advantage (A/A) and comparative advantage (C/A):
For countries 1 and 2:
In razors, ______ has the absolute advantage and ______ has the comparative advantage.
In wigs, ______ has the absolute advantage and ______ has the comparative advantage.

COUNTRIES 3 AND 4:
Comparative efficiency:
Mark the information which correctly completes these sentences:
Compared to country 4, country 3 has its biggest efficiency advantage in razors.
smallest efficiency disadvantage wigs.
Compared to country 3, country 4 has its biggest efficiency advantage in razors.
smallest efficiency disadvantage wigs.

Comparative opportunity costs:
Comparing 3 and 4: which country has the lower opportunity cost for producing razors? ______
                               which country has the lower opportunity cost for producing wigs?   ______
Absolute advantage (A/A) and comparative advantage (C/A):
For countries 3 and 4:
In razors, ______ has the absolute advantage and ______ has the comparative advantage.
In wigs, ______ has the absolute advantage and ______ has the comparative advantage.