Comparative Advantage - AP Microeconomics
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What is the main driver of international trade?
What is the main driver of international trade?
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Comparative advantage. Opportunity cost differences drive international exchange.
Comparative advantage. Opportunity cost differences drive international exchange.
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Which concept determines specialization in trade?
Which concept determines specialization in trade?
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Comparative advantage. Countries specialize where they have lowest opportunity cost.
Comparative advantage. Countries specialize where they have lowest opportunity cost.
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What is the significance of opportunity cost in trade?
What is the significance of opportunity cost in trade?
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It determines comparative advantage. Opportunity cost determines who should produce what.
It determines comparative advantage. Opportunity cost determines who should produce what.
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Identify the factor: Determines specialization in a good.
Identify the factor: Determines specialization in a good.
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Comparative advantage. Lower opportunity cost determines production choice.
Comparative advantage. Lower opportunity cost determines production choice.
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What determines the pattern of trade between countries?
What determines the pattern of trade between countries?
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Comparative advantage. Opportunity cost differences determine who trades what.
Comparative advantage. Opportunity cost differences determine who trades what.
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Which advantage is related to production efficiency?
Which advantage is related to production efficiency?
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Absolute advantage. Measures how much can be produced with given resources.
Absolute advantage. Measures how much can be produced with given resources.
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Calculate opportunity cost of 1 unit of X if 6 units of Y are forgone.
Calculate opportunity cost of 1 unit of X if 6 units of Y are forgone.
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$\frac{6}{1} = 6$ units of Y. Basic opportunity cost calculation.
$\frac{6}{1} = 6$ units of Y. Basic opportunity cost calculation.
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What increases when countries trade based on comparative advantage?
What increases when countries trade based on comparative advantage?
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Total welfare and efficiency. Specialization improves global resource allocation.
Total welfare and efficiency. Specialization improves global resource allocation.
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Identify the key factor in deciding which goods to export.
Identify the key factor in deciding which goods to export.
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Comparative advantage. Countries export goods with lowest opportunity costs.
Comparative advantage. Countries export goods with lowest opportunity costs.
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Which advantage results from using fewer resources?
Which advantage results from using fewer resources?
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Absolute advantage. Based on production capacity, not opportunity cost.
Absolute advantage. Based on production capacity, not opportunity cost.
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Identify the condition: A country produces a good at a lower opportunity cost.
Identify the condition: A country produces a good at a lower opportunity cost.
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Comparative advantage. Lower opportunity cost defines comparative advantage.
Comparative advantage. Lower opportunity cost defines comparative advantage.
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What dictates the allocation of resources in international trade?
What dictates the allocation of resources in international trade?
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Comparative advantage. Opportunity costs guide efficient resource distribution.
Comparative advantage. Opportunity costs guide efficient resource distribution.
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Calculate opportunity cost of 1 phone if 2 tablets are forgone.
Calculate opportunity cost of 1 phone if 2 tablets are forgone.
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$\frac{2}{1} = 2$ tablets. Direct opportunity cost calculation.
$\frac{2}{1} = 2$ tablets. Direct opportunity cost calculation.
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Which principle supports the idea of free trade?
Which principle supports the idea of free trade?
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Comparative advantage. Efficiency gains from specialization support trade benefits.
Comparative advantage. Efficiency gains from specialization support trade benefits.
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Which advantage is based on lower opportunity costs?
Which advantage is based on lower opportunity costs?
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Comparative advantage. Focuses on efficiency of resource allocation, not quantity.
Comparative advantage. Focuses on efficiency of resource allocation, not quantity.
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What happens to opportunity cost if production requires more resources?
What happens to opportunity cost if production requires more resources?
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Opportunity cost increases. More resources needed means higher sacrifice for production.
Opportunity cost increases. More resources needed means higher sacrifice for production.
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Calculate opportunity cost of 1 laptop if 4 desktops are lost.
Calculate opportunity cost of 1 laptop if 4 desktops are lost.
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$\frac{4}{1} = 4$ desktops. Basic opportunity cost calculation.
$\frac{4}{1} = 4$ desktops. Basic opportunity cost calculation.
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Which advantage is less relevant in determining trade patterns?
Which advantage is less relevant in determining trade patterns?
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Absolute advantage. Trade patterns depend on opportunity costs, not output.
Absolute advantage. Trade patterns depend on opportunity costs, not output.
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What is the impact of comparative advantage on global production?
What is the impact of comparative advantage on global production?
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Increases total output. Specialization based on efficiency creates more goods overall.
Increases total output. Specialization based on efficiency creates more goods overall.
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What is the basis of a country's specialization?
What is the basis of a country's specialization?
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Comparative advantage. Countries focus on goods with lowest opportunity costs.
Comparative advantage. Countries focus on goods with lowest opportunity costs.
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What is the difference between absolute and comparative advantage?
What is the difference between absolute and comparative advantage?
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Absolute: more output; Comparative: lower opportunity cost. Key distinction: output quantity vs. opportunity cost efficiency.
Absolute: more output; Comparative: lower opportunity cost. Key distinction: output quantity vs. opportunity cost efficiency.
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Find the opportunity cost of producing 1 unit of good X if 2 units of good Y are sacrificed.
Find the opportunity cost of producing 1 unit of good X if 2 units of good Y are sacrificed.
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$\frac{2}{1} = 2$ units of Y. Direct calculation using the opportunity cost formula.
$\frac{2}{1} = 2$ units of Y. Direct calculation using the opportunity cost formula.
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State the principle that explains trade benefits.
State the principle that explains trade benefits.
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Comparative advantage. Core economic principle explaining trade benefits.
Comparative advantage. Core economic principle explaining trade benefits.
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What concept leads to mutually beneficial trade?
What concept leads to mutually beneficial trade?
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Comparative advantage. Both countries benefit when each specializes efficiently.
Comparative advantage. Both countries benefit when each specializes efficiently.
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Is it possible for a country to have comparative advantage in all goods?
Is it possible for a country to have comparative advantage in all goods?
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No. A country must sacrifice something to gain comparative advantage.
No. A country must sacrifice something to gain comparative advantage.
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Find the opportunity cost of 1 pair of shoes if 3 hats are lost.
Find the opportunity cost of 1 pair of shoes if 3 hats are lost.
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$\frac{3}{1} = 3$ hats. Standard opportunity cost calculation.
$\frac{3}{1} = 3$ hats. Standard opportunity cost calculation.
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What is the result of countries specializing according to comparative advantage?
What is the result of countries specializing according to comparative advantage?
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Increased overall production and trade benefits. Specialization leads to efficiency gains and mutual benefits.
Increased overall production and trade benefits. Specialization leads to efficiency gains and mutual benefits.
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What is the effect of comparative advantage on trade prices?
What is the effect of comparative advantage on trade prices?
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Determines relative trade prices. Opportunity costs determine exchange rates between goods.
Determines relative trade prices. Opportunity costs determine exchange rates between goods.
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What is the relationship between opportunity cost and comparative advantage?
What is the relationship between opportunity cost and comparative advantage?
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Lower opportunity cost leads to comparative advantage. Inverse relationship: lower cost creates advantage.
Lower opportunity cost leads to comparative advantage. Inverse relationship: lower cost creates advantage.
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Find the opportunity cost of 1 widget if 5 gadgets are sacrificed.
Find the opportunity cost of 1 widget if 5 gadgets are sacrificed.
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$\frac{5}{1} = 5$ gadgets. Straightforward opportunity cost calculation.
$\frac{5}{1} = 5$ gadgets. Straightforward opportunity cost calculation.
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