Comparative Advantage Worksheet:
What is the difference between absolute advantage and comparative advantage?
Use the charts to complete the following questions:
MIKE & DEBBY
Mike
Debby
Vacuum room
60 minutes
45 minutes
Wash Dishes
30 minutes
45 minutes
Mike:
1 room = 1
1 load = 1/2
1.
2.
3.
4.
5.
6.
7.
8.
9.
load
room
DEBBY:
1 room = 1 load
1 load = 1 room
What is Mike’s opportunity cost of vacuuming in terms of washing dishes
2 loads of dishes
What is Mike’s opportunity cost of washing dishes in terms of vacuuming?
Vacuuming ½ a room
What is Debbie’s opportunity cost of vacuuming in terms of washing dishes?
Washing 1 load of dishes
What is Debbie’s opportunity cost of washing dishes in terms of vacuuming?
Vacuuming 1 room
Who has the absolute advantage in vacuuming?
Debbie
Who has the absolute advantage in washing dishes?
Mike
Who has the comparative advantage in vacuuming?
Debbie
Who has the comparative advantage in washing dishes?
Mike
Who should do which chore and why?
Mike should wash dishes and Debbie should vacuum because they have the
comparative advantage in those chores. They have the lowest opportunity cost in
the chores and will be more efficient.
ANDY & HANNAH
Andy
Hannah
cleaning offices
60 minutes
20 minutes
cleaning jail cells
30 minutes
15 minutes
ANDY:
1 office = 2 jail cells
1 jail cell = ½ office
10.
11.
12.
13.
14.
15.
16.
17.
18.
HANNAH:
1 office = 4/3
1 jail cell = ¾
jail cells
office
What is Andy’s opportunity cost of cleaning offices in terms of cleaning jail cells?
Cleaning 2 jail cells
What is Hannah’s opportunity cost of cleaning offices in terms of cleaning jail cells?
4/3 of a jail cell
What is Andy’s opportunity cost of cleaning jail cells in terms of cleaning offices?
Cleaning ½ of an office
What is Hannah’s opportunity cost of cleaning jail cells in terms of cleaning offices?
Cleaning ¾ of an office
Who has the absolute advantage in cleaning offices?
Hannah
Who has the absolute advantage in cleaning jail cells?
Hannah
Who has the comparative advantage in cleaning offices?
Hannah
Who has the comparative advantage in cleaning jail cells?
Andy
Who should do which chore and why?
Hannah should clean offices and Andy should clean jail cells because they will finish
their chores sooner. The person with the lowest opportunity cost should do the
chore.
US & JAPAN
US
JAPAN
Cars
12
10
Computers
4
6
US:
1 car = 1/3 computer
1 computer = 3 car
19.
20.
21.
22.
23.
24.
25.
26.
27.
JAPAN:
1 car = 3/5 computer
1 computer = 5/3 car
What is the US’s opportunity cost of making cars?
For every car it must give up 1/3 of a computer
What is Japan’s opportunity cost of making cars?
For every car it must give up 3/5 of a computer
What is US’s opportunity cost of making computers?
For every computer it must give up 3 cars
What is Japan’s opportunity cost of making computers?
For every computer it must give up 5/3 of a car
Who has the absolute advantage in cars?
US
Who has the absolute advantage in computers?
Japan
Who has the comparative advantage in cars?
US
Who has the comparative advantage in computers?
Japan
Which country should produce which good and why?
US should make cars and Japan should make computers because each country can
produce them for the lowest cost. The total output of computers and cars would be
higher.