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AP Microeconomics 1.4 Comparative Advantage and Trade Questions

Compare producers with output, labour, and opportunity-cost data, then use comparative advantage and acceptable terms of trade to explain specialization and gains.

Syllabus
Effective Fall 2022
Course
AP Microeconomics

Exam points

  • identify absolute advantage from output or labour requirements and distinguish it from comparative advantage
  • calculate opportunity costs and assign comparative advantage from tables or PPC data
  • use comparative advantage to choose specialization and the resulting export or task pattern
  • calculate or evaluate mutually beneficial terms of trade between the two opportunity costs
  • explain how specialization and exchange expand consumption possibilities beyond the PPC

Covered syllabus points

MKT-2.A—a. Define absolute advantage and comparative advantage. b. Determine (using data from PPCs or tables as appropriate) absolute and…MKT-2.B—a. Explain (using data from PPCs or tables as appropriate) how specialization according to comparative advantage with appropriate…

Question 1

[Maximum number: 3]

The graph shows the production possibilities curves for Northland and Southland.

Figure for Question 1 — AP Microeconomics

Question (a)

(a)

Which country has a comparative advantage in producing wheat? Explain using numbers.

[ 1 ]

Question (b)

(b)

Identify a specific number of yards of cloth that could be traded for 10 bushels of wheat and would be mutually beneficial to Northland and Southland.

[ 1 ]

Question (c)

(c)

Southland's maximum possible output of wheat falls from 100 bushels to 75 bushels. Assuming no other changes, will Southland have a comparative advantage in producing cloth? Explain using numbers.

[ 1 ]
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