@@saketsachinnaik9247 Na man, its D. We are looking at inputs, not outputs. Take the first box for Brazil for example. We have 12 hours to make coffee in brazil yet it takes 4 hours to produce wheat. If we produced coffee, we would lose 3 units of wheat. This is because if we spent our time making wheat, where it takes 4 hours to produce 1 unit, we would make 3 units. The way we have look at this problem is how much we are giving up. If we are giving up more, we do not have the comparative advantage. To produce 1 unit of coffee, we lose 3 units of wheat. Therefore the ratio of the boxes after doing this steps are Brazil (1:3 , 1:1/3) and Peru (1:3/2, 1:2/3). From this we know that Peru has comparative advantage in producing coffee due to a lower opportunity cost, and Brazil has a comparative advantage in producing wheat due to a lower opportunity cost. The only option that makes sense is D. It is not E, because you looked at it from an output perspective.
I took AP macro last semester and the teacher barely taught anything! I never understood anything and struggled so much. I was really nervous to start studying for the AP exam but these videos are so helpful and now I'm learning more than I ever did when I was in the class! Thank you so much.
Kia ora Jacob, Just would like to thank you for posting all these Econ videos, I have learnt lot and used your explanation to write my assessments in which I got good marks. Once again, thank you so much.
Not sure if you’ll see this but thanks for your stuff. Yesterday was a level results day in the UK and I got my A in econ so thanks for the revision materials you’ve produced over the years.
Awesome explanations; awesome examples; awesome sense of humour; awesome tutoring skills = awesome channel. Thanks for making econs. fun and comprehensible.
I think number 4 was A. Peru could produce wheat for the same amount of labor hours as Brazil, but they lose less on the coffee side of things than Brazil. Brazil makes 4 loses 12 on coffee. Peru makes 4 and only loses 6 on the coffee side. So, Peru has an advantage in wheat production when compared to Brazil. Who's with me?
@@hunterhobbs4374 If you look at it in terms of fractions, it takes Brazil 4 hours to make wheat and 12 hours to make coffee. As a fraction, this would be 1:3; 1 hour for wheat, 3 hours for coffee. Whereas Peru takes 4 hours to make wheat and 6 hours to make coffee, which would be 2:3. Therefore, Brazil has the comparative advantage in making wheat, and if you flip the numbers, Peru has the comparative advantage in making coffee (*whoever has the smaller fraction has the comparative advantage since we're dealing with an input question).
Jacob Clifford 2 years ago The answer key is below. Just click on "Read more." Please let me know how you did. Your rock! Answers 1.D 2.D 3.B 4. D (this is an input question)
never thought i wouldnt get bored studying but here i am studying for a micro macro test i have next week actually being distracted by what im studying
lol just slightly late; you could do the math but when you look at comparative adv. Country B produces steel under specialization, so A can't be correct.
in the past, people only trade goods. money wasn't invented until later. using currency has the advantage of easy carrying and various other advantages.
I'm studying for AP with the Ultimate review packet and I think there is a mistake in Topic 1.3 question 8. Can you please review and let me know if I'm wrong. Thank you for all the effort you put into this!!!
The problem of the theory of comparative advantage is its assumptions: it assumes that there is perfect competition (businesses have no power to manipulate prices) and there are no externalities (a situation where the cost or the benefit to produce or consume something is not reflected on its market price). In reality, we find imperfect competition and externalities, so it might not fit reality quite well.
we just learned this concept in my Ap Econ class and I was completely lost in class. this video explained in 30 seconds what my teacher couldn’t in an hour. Thank you so so so much 🥹
Wait... So if you made one extra car... You would have two thirds of a plane?? Jeez, this sounds almost as safe as Boeing 737 (A crash every ~500 000 hours)
@@Stoicayushbecause wheat produced is the same as Brazil in the case of Peru, while coffee production is greater in Peru than in Brazil. Therefore, Peru must have a comparative advantage in coffee production because they produce more coffee for the same wheat. In other terms, Peru has to give up 1.5 units of coffee for 1 unit of wheat. Whereas Brazil has to give up 3 units of coffee for 1 unit of wheat. Therefore, Peru has a comparative advantage in the production of coffee.
