Social Sciences and History / Unit 13 SSH 1210 worked example, 60 to 90 seconds
Comparative Advantage From a Table; Positive Against Normative
The idea
The exam gives two countries' outputs and asks who should produce what, and the anchor's frontier logic answers. The curvature of the frontier differs by country, so countries have comparative advantage in different goods: a country has comparative advantage where it can produce a good at lower cost in terms of other goods, that is, at lower opportunity cost. Total production rises when each specializes in its comparative advantage and trades for the rest. A second sorting the exam asks is positive against normative: positive statements describe the world as it is; normative statements describe how it should be. Economic analysis is rooted in the positive, how people actually behave, even when it draws normative conclusions.
In practice
Given "A gives up two cloth for one wheat; B gives up four cloth for one wheat", A has the comparative advantage in wheat, B in cloth, whatever their totals. Given "a tariff will raise the price of steel", positive. Given "the tariff should be repealed", normative. Given "the minimum wage reduces teenage employment", positive, testable. Ask, for trade, whose sacrifice is smaller; for statements, whether the sentence can be checked or only argued.
Where people slip
The trap is absolute advantage: producing more of both does not decide who should specialize. The second trap is calling a positive claim true; positive means checkable, not correct.
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