## Friday, September 4, 2015

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).

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).

Couple of fun videos

In teaching comparative advantage this last couple of days I have made some connections that might have been plain to many before me, but I remained clueless. (story of my life)

The biggest confusion seems to come from being able to discern the difference between output and 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.

The key here is that to produce using an equal amount of resources. (Output Problem)

2008 AP Exam
Notice the "use equal amount of resources" (Output Problem)

2005 AP Exam
Notice the "10 units of labor for country A and the 10 units of labor for country B"
"equal amount of resources" (Output Problem)

2008 AP Exam
Notice: "using all of their available resources" - (Output Problem)
This problem doesn't say explicitly that equal resources are used but it does supply the axis which label grain and steel (in tons) as what is produced using all available resources.
Implies: that an equal amount of resources are used.

2010
Notice: Using equal amounts of labor hours. (Output Problem)

2008 AP Exam (FRQ)
Notice: "Using equal amounts of resources" (Output Problem)

2004 AP Exam (FRQ)
Notice: "Using equal amounts of resources" (Output Problem)

I think I have beaten this horse enough.  I like to think that sometimes it is the small phrases or tips that we have students place in their brains that could possibly help them answer the question correctly.