Comparative advantage and absolute advantage | Microeconomics | Khan Academy

Showing that a party benefits from trade as long as there is a comparative advantage (and not necessarily an absolute advantage)

Microeconomics on Khan Academy: Topics covered in a traditional college level introductory microeconomics course

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[gur]

to summarise: trade is based on Comparative Advantage NOT Absolute Advantage!.

[danielmaringka]

Anyone else think about something when Khan said "2 plates and 1 cup"? xD Anyway, really nice video. Helps me with studying for my exam. Thanks Khan!

[pedacodcielo]

You are super awesome at a explaining it for me I had a real time understanding it by reading the text book . Test is in two days you've helped me a lot. Thank you.

[brodobroggins]

Charlie, by increasing his absolute advantage, was able to get a better deal in negotiating for plates. Before, he traded 1 cup for 1 plate but now even though he is still producing cups, he can trade 1 cup for 2 plates. At the end of the day they both win through trading but Charlie wins more since he invested that money in gaining absolute advantage.

[MrVargasesteban]

wow this was actually pretty interesting. I never thought economy could be so cool.

[isedairi]

YOu live in a dream world. Read a bit of history on England and the USA and tell me if they got to their situation because they opened up their own markets. Read "Bad Samaritans" by Ha Joon Chang and learn something before repeating this that you justheard somewhere which is disconnected from reality.

[hawaii]

is it possible to have both the absolute and comparative advantage?

[FashionbyBrittany]

Studying this before my exam!! I understand it completely now thank you

[TheRayhow]

am i the only one that doesnt get audio?

[FeliciaCravens]

Is it bad that I want little animated Patty and Charlie?  With towers of cups and plates falling all over the place?

[ul]

Something is incorrect here. If you are looking at an output graph or table, you don't know how many inputs there were. It doesn't matter. All you know is that the tradeoff leads to each (country) having a different comparative advantage as long as the PPFs are not parallel. You can assume that each country is doing its best - whatever the inputs. (Even if it wasn't doing its best - it doesn't matter for this example.) If the slopes of the two PPFs are different, there are advantages to trade. The stuff about inputs here is confusing. All you need to know is that the PPF is given. Also, the example should be between countries. Then, people are not thinking of Patty or Charlie - where individual effort is more apparent than an entire country so we are not thinking of two people where the student may cloud their mind by thinking about hours, effort, laziness, whatever. In your example - if someone becomes more efficient - again better to think of a country. Otherwise, you start thinking that one of the people worked more hours, or got a new machine. Again, it doesn't matter.

[isedairi]

Ok, now show the Prebisch critique of this abstract/unreal idea of specialization and trade based on comparative advantage that benefits all. Do the world a service and stop repeating this ideology which passes as science. The world does not work according to this.

[millieg]

question if c produces bananas usin g more labour capital etc what would c have

[garimapanday]

Is opportunity cost does matter in absolute advantage in any way ?

[Borokan]

lol if they got that reference then i think they are fairly screwed already

[animalsfeelpain]

@QuasiBelgium come on.... there are kids watching this

[karahlee]

im so immature i keep laughing when he says ppf bc pp ahhahahhhaha

[impersonators]

Does anyone else think he sounds a lot like Tom Hanks?

[SalaDaBalloBlaze]

These are the best i was thinking bout AP Macro is there vids for that tooo?

[SalaDaBalloBlaze]

If kids can get that joke, its bad enough. haha