Principles of Microeconomics / Unit 16 MIC 1505 short lesson, about 20 seconds
The Reciprocal Rule
Captions available
The idea
One good's opportunity cost is the reciprocal of the other's, so a country cheaper in wheat is dearer in cloth. No country holds the comparative advantage in both goods, and every country holds it in something.
In practice
Half a bolt per ton means two tons per bolt.
Where people slip
Sometimes absolute and comparative advantage coincide; the exam tests the case where they differ.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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