Comparative Advantage Calculator

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Optional: give the first producer a name to personalise the results.
Optional: name the first good.
Maximum units of Good 1 Producer 1 can make in a fixed period (e.g. per day or per worker-hour) if all resources are devoted to it.
Maximum units of Good 2 Producer 1 can make if all resources are devoted to it.
Maximum units of Good 1 Producer 2 can make if all resources are devoted to it.
Maximum units of Good 2 Producer 2 can make if all resources are devoted to it.
Comparative advantage in Good 1Comparative advantage identified
Country A has comparative advantage in Wheat

The producer with the lower opportunity cost for Good 1

Opportunity cost: Producer 1 makes Good 10.5
Opportunity cost: Producer 1 makes Good 22
Opportunity cost: Producer 2 makes Good 11
Opportunity cost: Producer 2 makes Good 21
Comparative advantage in Good 2Country B has comparative advantage in Cloth
Gain in Good 1 output from specialization10
Gain in Good 2 output from specialization10
Producer 1 - OC of Good 10.5
Producer 2 - OC of Good 11
Producer 1 - OC of Good 22
Producer 2 - OC of Good 21

Country A has a comparative advantage in Wheat; Country B in Cloth.

  • Country A should specialize in Wheat: it gives up only 0.500 units of Cloth per unit of Wheat, versus 1.000 units for Country B.
  • Country B should specialize in Cloth: its opportunity cost of producing Cloth (1.000 units of Wheat) is lower than Country A's (2.000 units).
  • Compared to each producer splitting effort 50/50, full specialization changes total output by +10.00 units of Wheat and +10.00 units of Cloth.
  • Comparative advantage depends only on relative opportunity costs, not on who is the more productive producer overall (absolute advantage).

Next stepUse these results to set trade terms: the agreed exchange rate between the two goods should fall between the two producers' opportunity costs to benefit both parties.

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