barrel of oil is the loss of 1/4 of a bushel of corn that Saudi workers could otherwise have produced. In terms of

corn, notice that Saudi Arabia gives up the least to produce a barrel of oil. Table 19.4 summarizes these

calculations.

Country

Opportunity cost of one unit — Oil (in terms of

Opportunity cost of one unit — Corn (in terms

corn)

of oil)

Saudi

Arabia

United

States

¼

2

4

½

TABLE 19.4 Opportunity Cost and Comparative Advantage

Again recall that we defined comparative advantage as the opportunity cost of producing goods. Since Saudi

Arabia gives up the least to produce a barrel of oil, ( < in Table 19.4) it has a comparative advantage in oil

production. The United States gives up the least to produce a bushel of corn, so it has a comparative advantage

in corn production.

In this example, there is symmetry between absolute and comparative advantage. Saudi Arabia needs fewer
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