Opportunity cost and comparative advantage Worksheet

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How is opportunity cost calculated in comparative advantage?
What is a good example of comparative advantage?
What is the difference between absolute advantage and comparative advantage and opportunity cost?

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How is opportunity cost calculated in comparative advantage?

In country X, the opportunity cost, or the comparative advantage, of good A is 110 / 100 = 1.1 good B. The opportunity cost of good B in Country X is 100 / 110 = 0.91 good A. In country Y, the opportunity cost, or the comparative advantage, of good A is 80 / 90 = 0.89 good B.

What is a good example of comparative advantage?

For example, if a country is skilled at making both cheese and chocolate, they may determine how much labor goes into producing each good. If it takes one hour of labor to produce 10 units of cheese and one of of labor to produce 20 units of chocolate, then this country has a comparative advantage in making chocolate.

What is the difference between absolute advantage and comparative advantage and opportunity cost?

Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.