concept of comparative advantage is based on this idea of opportunity cost from Choice in a World of Scarcity.

For example, if Zambia focuses its resources on producing copper, it cannot use its labor, land and financial

resources to produce other goods such as corn. As a result, Zambia gives up the opportunity to produce corn.

How do we quantify the cost in terms of other goods? Simplify the problem and assume that Zambia just needs

labor to produce copper and corn. The companies that produce either copper or corn tell you that it takes two

hours to mine a ton of copper and one hour to harvest a bushel of corn. This means the opportunity cost of

producing a ton of copper is two bushels of corn. The next section develops absolute and comparative

advantage in greater detail and relates them to trade.

LINK IT UP

Visit this website (http://openstax.org/l/WTO) for a list of articles and podcasts pertaining to international trade

topics.
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