If you're seeing this message, it means we're having trouble loading external resources on our website.

If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked.

# Input approach to determining comparative advantage

In this video, we take a slightly different approach to determining comparative advantage because we are given data in a slightly different way. Rather than knowing how much of two goods can be produced in a day, we know how much of a resources (in this case labor) is needed to produce one unit of a good.

## Want to join the conversation?

• At you say multiply both sides by 3/8. Why do you do that?
• 2c = 8/3b

He's actually dividing 8/3. And what do you do to divide fractions? As one of my math teachers use to say, flip it and change it! 8/3 becomes 3/8 and division because multiplication. That's why he's multiplying by 3/8, he did the "flip it and change it" in his head.
• Lol the cold below/above the waist thing
• How do you determine the optimal trade for both counties?
• The video before this "Terms of trade and the gains from trade" explains this.
• How does using the amount of labor required to produce one unit of a good help us determine comparative advantage in a different way?
• Using the amount of labor required to produce one unit of a good helps determine comparative advantage by showing the relative efficiency of production between two entities. By calculating how much of one good must be forgone to produce another (the opportunity cost), we can determine which entity has a comparative advantage. This method focuses on the input (labor hours) required rather than the output, providing a different perspective on efficiency and comparative advantage. It emphasizes the cost side of production, which is crucial for understanding where comparative advantage lies.
• When solving for the Opp Cost, I was doing it in decimals and had the cost for B to make Belts be 2/2.6=.769. However, Sal ends up with 3/4 which is .75. What approach would be most exact, and what is most likely to be the system used on a college Econ Placement test? Fractions or Decimals?
(1 vote)
• When solving for opportunity costs, both fractions and decimals can provide accurate results. However, fractions are often more precise and can offer clearer insights into the exact trade-offs involved in production decisions. Decimals may sometimes require rounding, which can introduce small errors in calculation. In academic settings, including college econ placement tests, it's common to use fractions for these reasons. They convey the precise ratios without the need to round off, making them preferable for theoretical analysis. However, understanding how to work with both forms is important, as real-world applications may necessitate using decimals for practical reasons.
• at im so confused by the 3/8 x 2c=8/3b x 3/8

i understand the flip and change rule for dividing fractions but i dont know why he did the "times 3/8" at the end
• dividing x/y by x/y is same as multiplying x/y by y/x. Instead of diving both sides by x/y he just multiplying by the inverse fraction.
(1 vote)
• Hi everyone! Could someone enlighten me on this please? Thank you sm :)

"How can country B have the comparative advantage in toy cars even though country A has the absolute advantage (more efficient in its production) because of opportunity cost?"
(1 vote)
• In absolute advantage, we deal with one product. But in Comparative Adv we count other product too. Suppose, A produces 3 belts 3 cars. But B produces 5 belts and 15 cars. Now OC for B is 1 belt = 3 cars, if B could produce 10 cars then OC is 1b= 2c . Now look B has always absolute Adv in belt(5>3) but its Comparative Adv is changing with the number of another product(car) it can produce and we have to compare it to the OC of country A. Thus we decide Comparative adv.