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.

   Ari imagines the two countries trading. Using card A, which country should make cloth, and which rice?

   • A should make both goods, since A makes the most rice per worker
   • B should make cloth and A rice, since each gives up less of the other good
   • B should make both goods, since B makes 4 rolls of cloth against A's 2
   • A should make cloth and B should make rice, since each makes more of the other good
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
   • 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
   • Country B is the better country, since it makes more cloth per worker
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?

   • Whether each worker makes either rice or cloth in a day
   • The names of the countries' leaders, since leaders set how much each country trades
   • The price they agree on, such as how many bags of rice buy a roll of cloth
   • How many bags one worker of Country A makes 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
   • Yes: B gets rice, and A makes the most rice per worker
   • No: B could get 4 rolls from a worker, which is worth more than 2 bags
   • No: B gets 2 bags but gives up 2 bags worth of cloth in making the roll
6. 5.

   Kira checks card A: at 2 bags of rice for 1 roll of cloth, does A gain by buying a roll?

   • No: A makes the most rice, so A has no reason to buy anything
   • No: A pays 2 bags and a roll costs A just 1 bag to make
   • Yes: A would give up 3 bags to make a roll, and pays 2 bags
   • Yes: A pays 2 bags and gets a roll that costs B 4 bags to make
7. 6.

   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
   • A would not buy: 4 bags is more than the 3 bags a roll costs A at home
   • 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

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?

   • Neither, because each country is better at one of the two goods
   • Country Q, because it makes the smaller numbers and so costs less
   • Country P: it makes 8 bushels and 4 rolls per worker, against 2 and 2
   • 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?

    • Country Q: a roll costs Q 1 bushel of wheat, against 2 bushels for P
    • Country P, because P gives up 2 bushels, the larger sacrifice
    • Country P, because P is better at making cloth, 4 rolls against 2
    • Neither, because each country makes the same amount of wheat per roll
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
    • Q gains nothing from trade with P, since Q is worse at both of the goods on the card
    • P can still gain by buying cloth from Q if the price is under 2 bushels a roll
    • 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?

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