of two oil. Canada has the lower opportunity cost in producing lumber.

Step 5. In this example, absolute advantage is the same as comparative advantage. Canada has the absolute and

comparative advantage in lumber; Venezuela has the absolute and comparative advantage in oil.

Step 6. Canada should specialize in the commodity for which it has a relative lower opportunity cost, which is

lumber, and Venezuela should specialize in oil. Canada will be exporting lumber and importing oil, and Venezuela

will be exporting oil and importing lumber.

Comparative Advantage Goes Camping

To build an intuitive understanding of how comparative advantage can benefit all parties, set aside examples

that involve national economies for a moment and consider the situation of a group of friends who decide to go

camping together. The six friends have a wide range of skills and experiences, but one person in particular,
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