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.

A Numerical Example of Absolute and Comparative Advantage

Consider a hypothetical world with two countries, Saudi Arabia and the United States, and two products, oil

and corn. Further assume that consumers in both countries desire both these goods. These goods are

homogeneous, meaning that consumers/producers cannot differentiate between corn or oil from either

country. There is only one resource available in both countries, labor hours. Saudi Arabia can produce oil with

fewer resources, while the United States can produce corn with fewer resources. Table 19.1 illustrates the

advantages of the two countries, expressed in terms of how many hours it takes to produce one unit of each

good.
452 19 • International Trade

Country

Oil (hours per barrel) Corn (hours per bushel)

Saudi Arabia
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