Comparative advantage: why trade can help both sides

Grade 12 Social Studies Worksheet - Building Confidence

Circle the best answer.

1. Read this first

   Use this

   Card A. Compare chart "Output per worker per day" (made up for practice), columns Country | Rice (bags) | Cloth (rolls): Country A | 6 | 2; Country B | 4 | 4. Note: invented countries and figures, made up for practice. Each worker makes either rice or cloth in a day.

2. 1.

   Zee reads card A. Which country gives up fewer bags of rice to make one roll of cloth?

   • Neither, because both countries give up the same number of bags
   • Country A, because A makes the most rice per worker, 6 bags a day
   • Country A, because a roll of cloth costs A 3 bags and B just 1 bag
   • Country B: a roll costs B 1 bag of rice but costs A 3 bags
3. 2.

   Bo reads card A. Which claim about the two countries is best supported?

   • Country A makes rice because it has more workers than B
   • Country B is the better country, since it makes more cloth per worker
   • Each country has a lower cost than the other in one good
   • Country A is the better country, since it makes the most of one good
4. 3.

   Esme wants to know how many bags of rice and rolls of cloth the countries will trade. Which missing fact would help most?

   • The price they agree on, such as how many bags of rice buy a roll of cloth
   • The names of the countries' leaders, since leaders set how much each country trades
   • How many bags one worker of Country A makes in a day
   • Whether each worker makes either rice or cloth in a day
5. 4.

   They agree to trade at 2 bags of rice for 1 roll of cloth. Jun uses card A. Does B gain by selling a roll for 2 bags?

   • Yes: B gives up 1 bag to make a roll and gets 2 bags for it
   • No: B could get 4 rolls from a worker, which is worth more than 2 bags
   • Yes: B gets rice, and A makes the most rice per worker
   • No: B gets 2 bags but gives up 2 bags worth of cloth in making the roll
6. 5.

   Luz hears a price of 4 bags of rice per roll suggested. Using card A, which claim is best supported?

   • A would buy, since A makes 6 bags of rice a day and can afford 4
   • Both countries gain, since a higher price gives B more rice for each roll
   • B would refuse, since 4 bags is too much rice for a roll
   • A would not buy: 4 bags is more than the 3 bags a roll costs A at home
7. 6.

   Milo wants to say that both countries gain at any price between 1 and 3 bags per roll. Which missing check would help most?

   • How many bags B makes per worker
   • Whether the countries trade rice for cloth
   • Whether the price is at least as good as each country's own cost in bags per roll
   • How far apart the two countries are on a map, since distance sets the price that is paid

8. Use this

   Card A. Compare chart "Output per worker per day" (made up for practice), columns Country | Wheat (bushels) | Cloth (rolls): Country P | 8 | 4; Country Q | 2 | 2. Note: invented countries and figures, made up for practice. Each worker makes either wheat or cloth in a day.

9. 7.

   Noah reads card A. Which country is better at making both goods, per worker?

   • Country P: it makes 8 bushels and 4 rolls per worker, against 2 and 2
   • Neither, because each country is better at one of the two goods
   • Country Q, because it makes the smaller numbers and so costs less
   • Both are equal at wheat, since the countries differ just in their cloth
10. 8.

    Pia reads card A. Which country gives up fewer bushels of wheat to make a roll of cloth?

    • Neither, because each country makes the same amount of wheat per roll
    • Country P, because P gives up 2 bushels, the larger sacrifice
    • Country Q: a roll costs Q 1 bushel of wheat, against 2 bushels for P
    • Country P, because P is better at making cloth, 4 rolls against 2
11. 9.

    Country P is better at both goods. Ren uses card A. Which claim about trade is best supported?

    • P is better at both goods because it has more workers than Q
    • P can still gain by buying cloth from Q if the price is under 2 bushels a roll
    • Q gains nothing from trade with P, since Q is worse at both of the goods on the card
    • P gains nothing from trade with Q, since P is better at both of the goods on the card
12. 10.

    Tala wants to say P should buy all its cloth from Q. Which missing fact would help most?

    • How many rolls Q can make with all of its workers, and what price Q would accept
    • Whether P is better at wheat than Q
    • How much wheat Q makes per worker
    • Which country has the larger flag, since a flag sets how much each country will trade