Understanding Comparative Advantage and Opportunity Cost

This video tutorial explores the concept of comparative advantage by examining production possibility curves and output tables. It begins with an introduction to input tables, which show worker hours per item per country, and explains how to convert these into output tables. The tutorial then demonstrates how to calculate opportunity costs using these tables and determine which country has a comparative advantage in producing specific goods. The video emphasizes the importance of understanding opportunity costs and comparative advantage in economic decision-making.

What is the primary focus of the video tutorial?

• Learning about production possibility curves

• Discussing global trade policies

• Exploring opportunity cost and comparative advantage

• Understanding absolute advantage

In the context of input tables, what does the term 'input' refer to?

• The number of products produced

• The number of worker hours required

• The cost of raw materials

• The total revenue generated

How is the output table constructed from the input data?

• By evaluating the market demand

• By determining the number of products a worker can produce per day

• By analyzing the cost of raw materials

• By calculating the total revenue

What is the opportunity cost of producing one toy car in Country A?

• Half a belt

• Three belts

• One belt

• Two belts

What is the opportunity cost of producing one belt in Country B?

• Two toy cars

• Three-fourths of a toy car

• Half a toy car

• One toy car

What is the significance of calculating opportunity costs in trade?

• To calculate total production costs

• To understand the trade-offs between different products

• To identify the most profitable product

• To determine the absolute advantage

Which country has a comparative advantage in producing toy cars?

• Country A

• Country B

• Both countries

• Neither country

Why does Country B have a comparative advantage in toy cars despite Country A's absolute advantage?

• Country B has more workers

• Country B has a lower opportunity cost

• Country A has higher production costs

• Country A lacks resources

How does the concept of comparative advantage influence trade decisions?

• It encourages countries to produce all goods

• It helps countries specialize in products with lower opportunity costs

• It leads to higher tariffs

• It reduces the need for international trade

What is the relationship between opportunity cost and comparative advantage?

• Higher opportunity cost leads to comparative advantage

• Opportunity cost is irrelevant in trade

• Lower opportunity cost leads to comparative advantage

• Opportunity cost does not affect comparative advantage