Absolute Advantage vs. Comparative Advantage

The video tutorial explains the concepts of specialization, absolute advantage, and comparative advantage. It illustrates these concepts using examples of carpenters and countries producing coffee and sugar. The tutorial highlights the importance of opportunity cost in determining comparative advantage and discusses the concept of interdependence in global trade.

What is the primary benefit of specialization according to the tutorial?

• It leads to more efficiency and higher productivity.

• It allows for more leisure time.

• It increases the variety of products.

• It reduces the need for trade.

In the example of Harry and Lloyd, who has the absolute advantage in making birdhouses?

• Harry, because he can make more birdhouses in a day.

• Lloyd, because he can make more birdhouses in a day.

• Neither, because they make the same number of birdhouses.

• Both, because they have different skills.

What does comparative advantage take into account that absolute advantage does not?

• The opportunity cost of producing goods.

• The quality of goods produced.

• The time taken to produce goods.

• The total number of goods produced.

Why is it more beneficial for Harry to make birdhouses according to comparative advantage?

• He enjoys making birdhouses more.

• His opportunity cost for making birdhouses is lower.

• He can make more birdhouses than tables.

• He has more resources for making birdhouses.

Which country has a comparative advantage in producing coffee?

• Country B, because it produces more coffee.

• Country A, because it has a lower opportunity cost for coffee.

• Country B, because it has a lower opportunity cost for sugar.

• Country A, because it produces more sugar.

What is the concept of interdependence as explained in the tutorial?

• The competition between countries for resources.

• The ability of countries to produce all goods independently.

• The shared need of countries for resources and goods from others.

• The reliance of countries on their own resources.

How does interdependence affect global economies?

• It increases the self-sufficiency of countries.

• It isolates economies from each other.

• It connects economies, making them reliant on each other.

• It reduces the need for international trade.