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Grade 12 · Social studies

Find comparative advantage from opportunity costs

Distinguish lower opportunity cost from greater total output using a simple two-producer model.

6 authored questions + worked example

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Worked example

In one day, A can make 8 loaves or 4 pots; B can make 6 loaves or 6 pots. Assume constant opportunity costs. Who has comparative advantage in bread?

Answer & why

Answer: A has comparative advantage in bread

A gives up 4/8 = 0.5 pot per loaf; B gives up 6/6 = 1 pot per loaf. A’s cost is lower.

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All questions

All 6 authored questions for this skill.

Question 1

A can make 10 loaves or 5 pots; B can make 6 loaves or 3 pots in the same time. Assume constant opportunity costs. Compare bread opportunity costs.

  1. equal bread opportunity costs
  2. A has comparative advantage in bread
  3. B has comparative advantage in bread
  4. the data do not give both alternatives
A hint

Use a common time limit and calculate what one extra unit requires giving up.

Answer & why

Answer: equal bread opportunity costs

Both give up 0.5 pot per loaf.

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Question 2

A can make 20 loaves and B can make 10, but neither producer’s alternative output is supplied. What prevents a bread comparative-advantage conclusion?

  1. equal bread opportunity costs
  2. B has comparative advantage in bread
  3. the data do not give both alternatives
  4. A has comparative advantage in bread
A hint

Use a common time limit and calculate what one extra unit requires giving up.

Answer & why

Answer: the data do not give both alternatives

Bread output alone does not reveal the amount of another good given up.

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Question 3

A can make 12 loaves or 3 pots; B can make 8 loaves or 4 pots in the same time. Assume constant opportunity costs. Who has comparative advantage in bread?

  1. B has comparative advantage in bread
  2. A has comparative advantage in bread
  3. equal bread opportunity costs
  4. the data do not give both alternatives
A hint

Use a common time limit and calculate what one extra unit requires giving up.

Answer & why

Answer: A has comparative advantage in bread

A’s cost is 3/12 = 0.25 pot per loaf; B’s is 4/8 = 0.5 pot.

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Question 4

A can make 9 loaves or 9 pots; B can make 4 loaves or 2 pots in the same time. Assume constant opportunity costs. Who has comparative advantage in bread?

  1. B has comparative advantage in bread
  2. equal bread opportunity costs
  3. the data do not give both alternatives
  4. A has comparative advantage in bread
A hint

Use a common time limit and calculate what one extra unit requires giving up.

Answer & why

Answer: B has comparative advantage in bread

A gives up 1 pot per loaf, while B gives up 0.5 pot per loaf.

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Question 5

In one day, A can make 8 loaves or 4 pots; B can make 6 loaves or 6 pots. Assume constant opportunity costs. Who has comparative advantage in bread?

  1. B has comparative advantage in bread
  2. A has comparative advantage in bread
  3. the data do not give both alternatives
  4. equal bread opportunity costs
A hint

Use a common time limit and calculate what one extra unit requires giving up.

Answer & why

Answer: A has comparative advantage in bread

A gives up 4/8 = 0.5 pot per loaf; B gives up 6/6 = 1 pot per loaf. A’s cost is lower.

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Question 6

In one day, A can make 4 loaves or 8 pots; B can make 6 loaves or 3 pots. Assume constant opportunity costs. Who has comparative advantage in bread?

  1. the data do not give both alternatives
  2. equal bread opportunity costs
  3. B has comparative advantage in bread
  4. A has comparative advantage in bread
A hint

Use a common time limit and calculate what one extra unit requires giving up.

Answer & why

Answer: B has comparative advantage in bread

A’s cost is 8/4 = 2 pots per loaf; B’s is 3/6 = 0.5 pot per loaf.

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