Comparative Advantage Review
Table # Names:
1) What is opportunity cost? Give an example.
2) What is trade based on comparative advantage?
3) Suppose Mr. Hanson is the best plumber, electrician, and landscaper in Seattle. Even though
he has an absolute advantage in these three areas, what would he gain by hiring a plumber
and a landscaper, while he installs the electricity in his new house?
4) Suppose Mr. Hanson decides he wants to be the best electrician in the United States. So,
he devotes all of his time being an electrician, and gives up plumbing and landscaping. With
his focus on one activity, Mr. Hanson gets better and quicker at installing the electrical
components of a house. What is it called when Mr. Hanson focuses on one activity?
**CHALLENGE**
Using the table below, find the opportunity cost of producing cars and trucks for each nation.
Country Cars Trucks Remember, when finding the
U.S. 4 2 nation’s opportunity cost of a
particular good, the OTHER good
Mexico 1 3
the nation produces goes over that
Total 5 5 good: