AP Macroeconomics
1.3 Comparative Advantage
Specialize where opportunity cost is lower. Trade inside the two costs.
1 · Table
Output per hour
Read the table. Drag a point along each PPC. Show key to see opportunity costs.
| Lattes | Sandwiches | |
|---|---|---|
| Chelsea | 8 | 4 |
| Olivia | 6 | 6 |
2 · Absolute vs comparative
Absolute vs. comparative
Sort each line into Absolute or Comparative. Tap then tap, or drag.
Absolute advantage
More output
Comparative advantage
Lower OC
3 · Specialize
Who specializes?
Drop each producer onto the good they should specialize in. Tap then tap, or drag.
Tokens
Lower OCLattesDrop here
Lower OCSandwichesDrop here
4 · Terms
Terms of trade
Sort each deal into Trade or No trade. Tap then tap, or drag.
A deal for 1 latte is mutually beneficial only if it costs more than ½ sandwich and less than 1 sandwich.
Trade
Inside the range
No trade
Outside the range