This unit aims to cultivate critical thinking skills in students as they explore microeconomics and macroeconomics, examining the role of government in the economy through lessons that encourage analysis, evaluation, and understanding of economic principles and government interventions.
In this lesson, we will explore one of the fundamental concepts of economics and international trade—comparative advantage, which is the production of a good or service at a lower opportunity cost than another country.
Which perspective should you take if you’re trying to answer the question, “How much does that hamburger cost”? Whose point of view, even if we rightly include opportunity costs, is the “correct” one? How might this help us to analyze issues of public policy?
Comparative advantage, on its face, is indeed a difficult idea. Our unexamined gut reaction to the question “who should do X?” is to say “the person who is best at X.” Part of the confusion of comparative advantage rises from this word “best.” Best according to what metric? Typically, people use “best” in an absolute manner: who can, in absolute terms, produce the most.