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ECONOMICS FOR DUMMIES (PRINT DESIGN)
E c o n o m i c s
C h a p t e r o n C o m
p a r a t i v e A d
v a n t a g e
What is Comparative Advantage?
----------------------------What’s the Law of
What’s the different betweenComparative Advantage and
Wri t t en b y J o
s e p h B u s t o , B
r an d o Ar c e , an d Vi c t
or D a t u
Economics for Dummies 1
Hero vs. HumanIntroduction to Comparative Advantage in the
Context of Superheroes and Average Joes
Let’s just imagine for a second that you are in a grocery
store, purchasing your weeklygroceries. Undoubtedly, you will need
to get your groceries home. Unfortunately, your theoretical
self lacks both the necessary strength to even push the cart
containing your groceries, as well astransportation to bring your
groceries to the suburbs in which you reside. You have two
optionsavailable: ask a friend to come help you with your
groceries, or hire Superman.
Now, at face value, the obvious choice here is to hire Superman.
After all, a
superhuman Kryptonian with super strength and flight can surely
get anythinganywhere quickly, much less groceries. He even has
laser eyesight with which to defend himself, and
whatever items are on his person! The Man of Steel would make a
perfect delivery boy. He wouldget you and your groceries home in a
few seconds. However, Superman, being the superhero that he
is, has other priorities. Namely, refurbishing his Fortress of
Solitude. Having taken that intoconsideration, Superman’s delivery
fee starts at one million pesos.
Your friend, on the other hand, is a regular, run-of-the-mill
citizen. An average Joe, so to speak. You’d phonehim on your
cellular, he’d come over with his beat-up pickup truck, and drive
you home. The entire process would take
over two hours, more if you happen to run into traffic. However,
since he’s your friend, you’d only have to pay for gasmoney.
Comparative advantage is the ability to produce or offer
something at a lower cost than others. This is an
example of it. While Superman is immeasurably faster than your
friend at bringing you and your groceries home, hiringSuperman is
too costly. Even if your friend takes two hours longer than our
friendly neighborhood Kryptonian, theopportunity cost of asking
your friend for a favor and only having to pay for gas money
outweighs the extra time it takes
for your friend to accomplish the same task as Superman.
EconoTalk!Key definitions to help you understand Comparative
Let’s delve into this further using another story. Everybody
knows who His Airness is, and he is
none other than the NBA legend, Michael Jeffrey Jordan. This man
has changed the game of basketballand it would be no doubt that he
possesses an absolute advantage for it. For all I know, MJ
could also be a very fast typist. Hence, having an absolute
advantage for typing as well.
Question: That is, if someone has an absolute advantage in
something, doesn't heautomatically have a comparative advantage in
it? The answer is NO.
Let’s try to analyze the situation. If Michael were to take time
off the court and stop his career to type out
papers, he will be definitely sacrificing a big amount of money,
as well as a championship ring, during his time of absencefrom the
basketball scene. However, if, instead, he makes his secretary do
the typing work, the secretary will be giving up alow-paying
basketball salary (if the secretary was to play for the NBA).
Hence, the secretary is the one who has the
comparative advantage. The key to understanding comparative
advantage cases is to focus on the opportunity
cost and that focuses on the value of something given up.To
further understand the context of comparative advantage, one must
understand three important terms/
concepts and that is; Absolute Advantage, Opportunity Cost
and the Law of Comparative Advantage.
Absolute Advantage is defined as the ability of a country,
individual, company or region t o produce a good
or service at a lower cost per unit than the cost at which any
other entity produces that good or service. Basically, tosimply
understand it, absolute advantage is met when someone can
produce something (product or service) by using less
resources compared to another.
8/21/2019 Victor Datu - Portfolio
THE JADE VINE
Learn more about thebeauty of this endemic
Take a look at the Jade Vine's important role in
Action towards preserving thisorganism should be a
The Jade Vine is not only afactor in the country’s tourismfor
it’s attractive look, it also
provides for the bats in thatarea. These flowers arepollinated
by bats that are
drawn to the luminous color ofthe plant. It provides food/
sustenance for the bats, whichis important for their survival.
Ifthe pollination is successful, the jade vine produces
jade vine can provide for otherorganisms as well, thus
that it should be a priority toprotect.
ENVIRONMENTAL SCIENCE PROJECT (PRINT DESIGN)One