In this lesson, our instructor Jibin Park gives an introduction on comparative advantage and trade. He discusses trade and specialization, market economy, command economy, mixed economy, absolute advantage, and comparative advantage.
Trade and specialization in market economies creates wealth for all countries involved.
Comparative advantage takes into account the opportunity cost of a decision.
Absolute advantage simply states who is better at making a product and is therefore not as helpful as comparative advantage because opportunity cost is not taken into account.
In order to find a country’s comparative advantage, create a table and identify the country with the lower opportunity cost.
A country with the flatter PPF curve will have comparative advantage for the item on the x-axis.
A country with the steeper PPF curve will have comparative advantage for the item on the y-axis.
Comparative Advantage & Trade
Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.
This book created a 5-step plan to help you study more effectively, use your preparation time wisely, and get your best score. This book includes two full-length practice exams modeled on the real test, all the terms and concepts you need to know to get your best score, and your choice of three customized study schedules.
This book includes an in-depth preparation for both AP economics exams. It features two full-length practice tests, one in Microeconomics and one in Macroeconomics, and all test questions answered and explained. It also features a detailed review of all test topics, which include: supply and demand, theory of consumer choice, economics in the public sector, costs, perfect and imperfect competition, monopolies, labor resources, game theory, the national income and gross domestic product, inflation and unemployment, fiscal policy, money and banking, monetary policy, economic growth, international trade and exchange, interest rate determination, and the market for loanable funds.