Friday, September 4, 2015

Comparative Advantage (Input Problems)

Comparative Advantage (Input Problems)

Absolute Advantage - A country is said to have an absolute advantage in the production of a good if it can produce the most goods with the same resources: or the same amount of goods, using the least amount of resources. (Efficiency is key
The definition does not assume trade and there is no analysis of opportunity cost.

Input Problems - a country can produce the same good (1 unit of) using the least amount of resources.

The key phrase is:
(can produce one unit of food or one unit of clothing).

I have not found a FRQ question using comparative advantage that requires the input method. 

1995 AP Macro Exam
Notice: one unit of food or one unit of clothing (Input Problem)

2000 AP Micro Exam
Notice: one unit of food or one unit of clothing (Input Problem)

So, just to say it.

It could be one unit of steel or one unit of glass (Input Problem)

or    It could be one unit of hemp or one unit of manure (Input Problem)


Take Away - Input Problems

Resources into the production of the good are variable (inputs) while the measurement of the good produced is fixed (one unit).


Take Away - Output Problems

Resources into the production of the good is fixed (equal resources) while the amount of the good produced is variable (output).

Comparative Advantage Cheat Sheet







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