Comparative advantage

High school (ages 12+)
People & Society

Name:

Date:

Step 1 · Read the article

Open the article and read it at the level above. Then answer the questions below in your own words.

https://smallwhale.org/articles/comparative-advantage

Write what each word means, using the article.

Do not copy the article. Write two things you learned, the way you would explain them to a friend.

Answers below are taken from the article’s stored facts, so they match what the student read.

1. What is the economic theory?Explains gains from trade based on relative opportunity costs
2. What is the originator?David Ricardo, 1817
3. Why can two countries trade even if one is better at everything?Because each country may still be better at a different good when you look at opportunity cost. Trading lets each country focus on what it does best and share the rest.
4. How does trade help both countries?By specializing in the good they have a comparative advantage in, each country can produce more and then trade. This lets both countries eat more than they could alone.

Opportunity Cost: The value of the next-best alternative forgone when a choice is made.
Absolute Advantage: The ability to produce more of a good or service than competitors using the same amount of resources.
Autarky: A state of economic self-sufficiency; a country that does not trade with other countries.
Factor Endowments: The quantity and quality of land, labor, and capital that a country possesses.