Macroeconomics

‭Comparative Advantage: Solved Example‬ ‭In‬ ‭this‬ ‭example,‬ ‭assume‬‭that‬‭Japan‬‭and‬‭Sweden‬‭are‬‭capable‬‭of‬‭producing‬‭two‬‭different‬‭goods:‬ ‭trucks‬ ‭and‬ ‭helicopters‬ ‭.‬ ‭Let's‬ ‭break‬ ‭down‬ ‭the‬ ‭information‬ ‭and‬ ‭understand‬ ‭the‬ ‭concept‬ ‭of‬ ‭comparative‬ ‭advantage.‬

‭Based‬ ‭on‬ ‭the‬ ‭PPCs,‬ ‭Sweden‬ ‭can‬ ‭produce‬ ‭either‬ ‭30‬ ‭trucks‬ ‭and‬ ‭0‬ ‭helicopters,‬ ‭or‬‭10‬‭helicopters‬‭and‬‭0‬ ‭trucks,‬‭or‬‭any‬‭combination‬‭represented‬‭by‬‭the‬‭blue‬‭line.‬‭Japan,‬‭on‬‭the‬‭other‬‭hand,‬‭can‬‭produce‬‭either‬‭20‬

‭20‬

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