Comparative advantage: why trade can help both sides

Grade 12 Social Studies Worksheet

Circle the best answer.

1. Read this first

   Use this

   Card A. Compare chart "Output per worker per day and a ledger for 100 workers each" (made up for practice), columns Line | Country N (wheat, cloth) | Country O (wheat, cloth) | Both (wheat, cloth): Output per worker per day | 9, 3 | 5, 5 | not applicable; Before: each splits workers 50–50 | 450, 150 | 250, 250 | 700, 400; After specializing: N all wheat, O all cloth | 900, 0 | 0, 500 | 900, 500; After trading: O sends 200 cloth for 400 wheat | 500, 200 | 400, 300 | 900, 500. Note: invented countries and figures, made up for practice. Each worker makes either wheat or cloth in a day. The trade price is 2 wheat for 1 cloth.

2. 1.

   Zee reads card A's first line. Which country has the comparative advantage in cloth, and why?

   • Country N, because it gives up 3 bushels per roll, the larger sacrifice
   • Country O: a roll costs O 1 bushel of wheat but costs N 3 bushels
   • Country N, because it makes 9 bushels of wheat per worker, the most
   • Country O, because it makes 5 rolls per worker, against N's 3
3. 2.

   Ari uses card A. At which prices, in bushels of wheat per roll of cloth, would both countries gain from trade?

   • Any price below 3 bushels per roll, down to zero
   • Any price between 3 and 5 bushels per roll
   • Any price between 5 and 9 bushels per roll
   • Any price between 1 and 3 bushels per roll
4. 3.

   Bo reads the last line of card A. After the trade, what does each country hold, compared with the line marked Before?

   • N holds more of both goods, but O holds less wheat than before
   • Each holds more wheat and more cloth: N has 500 and 200, O has 400 and 300
   • Both hold the same as before, since the trade is an even swap
   • N holds 900 wheat and O holds 500 cloth, the amounts they have after specializing
5. 4.

   A writer says trade helps Country N only at Country O's expense. Esme tests the claim with card A. What is the verdict?

   • Supported: N holds 900 wheat after specializing, more than O holds of anything
   • Supported: N gives up 200 cloth to O, so N's gain is O's loss
   • Not supported: the ledger covers 100 workers, so it cannot say anything about trade
   • Not supported: after trading both countries hold more of both goods than they did before

6. Use this

   Card A. Compare chart "Hours of work to make one unit" (made up for practice), columns Country | One bushel of wheat | One roll of cloth: Country P | 2 hours | 4 hours; Country Q | 6 hours | 6 hours. Note: invented countries and figures, made up for practice. Each country has the same number of hours to spend.

7. 5.

   Jun reads card A. Country P is faster at both goods. Which country should make cloth, and why?

   • Country P, because it makes cloth in 4 hours, faster than Q's 6
   • Country Q: a roll costs Q 1 bushel of wheat, but costs P 2 bushels
   • Neither, because P is faster at both goods and so should make both
   • Country Q, because Q takes 6 hours for each good and so loses less
8. 6.

   Country P can buy a roll of cloth from Q for 1.5 bushels of wheat. Kira uses card A. Does P gain from buying?

   • Yes, but if Q does not gain, since the price helps just one side
   • Yes: a roll costs P 2 bushels to make, and buying costs 1.5 bushels
   • No: P pays 1.5 bushels and a roll costs P just 1 bushel to make
   • No: P makes cloth in 4 hours, so buying at 6 hours' worth is slower
9. 7.

   Q asks 2.5 bushels of wheat for a roll of cloth. Luz uses card A. What should P do?

   • Not buy: 2.5 bushels is more than the 2 bushels a roll costs P to make
   • Not buy, because P should refuse any trade when it is faster at both of the goods
   • Buy, because P is faster at both goods and can afford to pay the 2.5 bushels
   • Buy, because Q needs 6 hours per roll, which makes cloth worth 2.5
10. 8.

    A writer says P, faster at both goods, gains nothing from trading with Q. Milo tests this with card A. What is the verdict?

    • Supported: P is faster because it has more workers, so it needs nothing from Q
    • Not supported: Q makes cloth in 6 hours, which is faster than P's wheat
    • Not supported: P gives up 2 bushels per roll, so any price under 2 from Q leaves P better off
    • Supported: Q cannot make anything more cheaply than P, so P has no reason to trade with Q in any case

11. Use this

    Card A. Compare chart "U.S. trade in goods and in services, billions of dollars" (U.S. Bureau of Economic Analysis and U.S. Census Bureau, international trade in goods and services, through FRED, retrieved Nov 14, 2026), columns Year | Goods exports | Goods imports | Goods balance | Services exports | Services imports | Services balance: 2019 | 1,655.1 | 2,512.4 | −857.3 | 898.4 | 576.5 | 321.9; 2024 | 2,079.7 | 3,292.5 | −1,212.8 | 1,156.7 | 829.4 | 327.3. Note: current dollars. A balance is exports minus imports. Each value is the sum of the twelve monthly values for the year.

12. 9.

    A writer says a trade deficit shows a country has lost its comparative advantage. Pia tests the claim with card A. What is the verdict?

    • Not supported: services ran a surplus while goods ran a deficit, so a total cannot rank advantages
    • Supported: imports exceeded exports in goods in both years, so the advantage has been lost for good
    • Not supported: the card covers just 2019 and 2024, not the years between
    • Supported: the goods deficit widened, which means the country lost its advantage
13. 10.

    Tala wants to say in which good or service the U.S. has a comparative advantage. Which missing evidence would matter most?

    • What the U.S. gives up in other goods to make more of each, compared with other countries
    • The goods exports for 2025, to see whether the rise continued beyond the card's last year
    • The total number of items traded
    • The trade balance for 2020, to see whether the pattern held in a year between the two