Comparative Advantage Worksheet
Explore the concept of comparative advantage, opportunity cost, and its application in international trade with this Grade 11 Social Studies worksheet.
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Comparative Advantage: Understanding Global Trade
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Read each question carefully and provide thoughtful answers based on your understanding of comparative advantage and international trade.
1. What is the primary concept that comparative advantage helps to explain?
Why some countries have higher GDP than others
The benefits of international trade even when one country is more productive in all goods
How to calculate a country's absolute advantage
The impact of tariffs on domestic industries
2. Opportunity cost is a crucial element in determining comparative advantage. What does opportunity cost represent?
The total cost of production
The value of the next best alternative foregone
The cost of labor and capital
The cost of importing goods
3. A country has a advantage in producing a good if it can produce that good at a lower opportunity cost than another country.
4. Specialization based on comparative advantage leads to an increase in and overall global output.
5. A country cannot have a comparative advantage in producing a good if it does not have an absolute advantage in producing that same good.
True
False
6. Explain the difference between absolute advantage and comparative advantage. Provide a brief example to illustrate your point.
Consider two countries, Country A and Country B. Both can produce wheat and textiles. Country A can produce 100 units of wheat or 50 units of textiles in a day. Country B can produce 80 units of wheat or 40 units of textiles in a day.
7. Calculate the opportunity cost of producing one unit of wheat for Country A and Country B.
8. Based on your calculations, which country has a comparative advantage in producing wheat? Which has a comparative advantage in producing textiles?
9. If these two countries engage in trade based on comparative advantage, what would be the likely outcome for overall production and consumption?