Problem

What does a production possibilities frontier ill…

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Problem 10 Easy Difficulty

What is comparative advantage?

Answer

Clearly, country A has comparative advantage in oil production and country B has comparative advantage in copper production.

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Principles of Microeconomics for AP® Courses

Chapter 2

Choice in a World of Scarcity

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Video Transcript

everyone. Today we're solving problem number 10 from Chapter two of the textbook, which asks us to define comparative advantage. So from our textbook in our reading four. Chapter two, I've taken out the section, which gives us that definition an example. So I'm going to go through the example first and then explain the definition in a little more. Got with the example, because when defining terms have any having an example is always more useful toe. Understand the definition. So, um, we're given to different production possibility frontiers or production impossibility clubs. You could call it P P C o P p F. Um Essentially, they measure two different products and they say production of one thing her one of another thing. That is what it's measuring, and it's measuring for both Brazil and the United States. So if we read the description, says the United States Production Possibility Frontier, which is showing right here ISS flatter than the Brazil peopie up, implying that the opportunity cost of wheat in terms of sugar cane is lower in the U. S. Than in Brazil. So in the United States it is lower to produce one amount of wheat than in Brazil. Conversely, the opportunity cost of sugar heinous lower in Brazil. So to produce sugar cane in Brazil, you have to give up less. Essentially, you should be in Brazil. Then you have to give up Petitioner Canaan, United States. So that's we say, that the United States has a comparative advantage and Brazil has a comparative advantage. Sugar. So, um, when so now what is comparative advantage? Well, as you just described, when one country can produce a good at a lower opportunity cost, which means that they have to give up less to produce Good. Then the other country. We say that this country want to give up less and has a lower opportunity costs. They're gonna have compared it again in that good. So as we mentioned before, Brazil House the comparator and sugar he and the United States has compared to today. And that is because once again, Brazil hosted give up less to do sugar cane than the United States. Where is the United States has to give up less in Brazil to produce wheat? So, um, that is what compared the advantages. It is very easy with a simple observation of, um, ppl um, so comparing to production possibility thank yours is one of the best ways to observe which country is comparatively better. And there you have it. If you guys enjoy this video explanation, please of the light button next to it. I hope you all have a nice day. And thank you for watching you all get checked plus for today.

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