Exploring Absolute vs. Comparative Advantage

The tutorial explains specialization, absolute advantage, and comparative advantage. It uses examples of carpenters and countries to illustrate these concepts, highlighting the importance of opportunity cost. The video concludes with a discussion on economic interdependence, showing how countries rely on each other for resources and goods.

What does specialization lead to in economic terms?

• Lower standards of living

• Increased efficiency and higher productivity

• Reduced global trade

• Decreased productivity

If Harry can build more birdhouses in the same time as Lloyd, what advantage does he hold?

• None of the above

• Economic disadvantage

• Absolute advantage

• Comparative advantage

Why is Harry more productive than Lloyd in making birdhouses?

• Harry works longer hours

• Lloyd focuses on tables

• Harry can make more birdhouses in the same amount of time

• Harry has better tools

What is the opportunity cost for Harry when he decides to make one table?

• Four birdhouses

• One birdhouse

• Three birdhouses

• Two birdhouses

What should Harry focus on producing according to the law of comparative advantage?

• Neither

• Both tables and birdhouses

• Birdhouses

• Tables

Which product should Lloyd produce based on lower opportunity cost?

• Birdhouses

• Tables

• Both

• Neither

Which country has a comparative advantage in producing coffee?

• Country B

• Both countries

• Neither country

• Country A

What should Country B export to Country A?

• Sugar

• Coffee

• Neither

• Both coffee and sugar

What does the economic concept of interdependence illustrate?

• The need for countries to be self-sufficient

• The shared need for resources and services between countries

• The importance of maintaining high tariffs

• None of the above

What is the result of a drought in Guatemala on global coffee prices?

• Reduction in coffee quality

• Decrease in prices

• No impact

• Increase in prices