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?

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

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

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

   • No: B gets 2 bags but gives up 2 bags worth of cloth in making the roll
   • 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
6. 5.

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

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

   • 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
   • 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
8. 7.

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

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

9. 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.

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 gains nothing from trade with Q, since P is better 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
12. 10.

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

    • Which country has the larger flag, since a flag sets how much each country will trade
    • How much wheat Q makes per worker
    • 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