My name is Malak Hasanein. I am a university Student and I made this slide show to hopefully make comparative advantage easier for you :)

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2. Microeconomics
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4. The Simplified version of
Comparative Advantage
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6. Comparative Advantage
V.S.
Absolute Advantage
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8. Absolute Advantage
When a country produces more of something as compared to another
country.
It is the comparison of financial cost of production.
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10. Comparative Advantage
The ability of a country to produce a good or service at a lower
opportunity cost than another country.
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12. RECAP:
Opportunity Cost
Next highest alternative.
When one choice is made rather than another.
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14. Assume there are only two countries in the world. Saudi Arabia and the United States. Both
Countries produce Papers and Pens.
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15. Assume there are only two countries in the world. Saudi Arabia and the United States. Both
Countries produce Papers and Pens.
100 Papers 100 Pens
KSA 4 hours 2 hours
USA 15 hours 5 hours
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20. KSA has absolute advantage because it can produce papers and
pens at a lower financial cost.
Because it is taking less hours to produce these papers and pens.
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22. When deciding on Comparative
Advantage assume that there is no
difference in Quality!
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24. To calculate the opportunity cost:
For producing ONLY papers:
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25. To calculate the opportunity cost:
For producing ONLY papers:
100 Papers 100 Pens Ratio
KSA 4/4hrs 2/4hrs 1:1/2
USA 15/15hrs 5/15hrs 1:1/3
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27. Therefore:
KSA Gives up 50 pens to produce 100 papers.
while USA gives up only 33 pens to produce 100 papers.
This means that the USA has a comparative advantage over KSA in paper production.
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29. To Calculate the Opportunity Cost of ONLY making pens:
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30. To Calculate the Opportunity Cost of ONLY making pens:
100 Papers 100 Pens Ratio
KSA 4/2hrs 2/2hrs 2:1
USA 15/5hrs 5/5hrs 3:1
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32. Therefore USA has comparative advantage because it would be producing 3 times more
pens than its usual amount of production.
While KSA only produces 2 times more pens than its usual amount of production.
This mean that USA has a lower opportunity cost when it comes to pen production.
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34. Thank you!
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