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Make an opportunity cost table (agents by goods)1. Determine the output per per unit of input for each agent5. The country with the lower opportunity cost has a comparative advantage in the production of each good3. For each good (column) choose a unit of exchange4. Determine the opportunity cost of each good in termsof the unit of exchange by dividing the production ofthe unit of exchange by the production of the other goodOutput per unit of input dataExample Computation3. Rooms is unit of exchange for wash Wash is unit of exchange for rooms5. Bill has the comparative advantage in washing5a. Hillary has the comparative advantage in room cleaning4. Fill in comparative advantage table (unit of exchange per unit of good)HillaryBillLoads Rooms1.25 2.51.33 4HillaryBillLoads Rooms2 r3 r1/2 l1/3 lExample Computation3. Peanuts is unit of exchange for corn Corn is unit of exchange for peanuts4. Fill in comparative advantage table (unit of exchange per unit of good)MexicoUSACorn Peanuts0.4040.25 2MexicoUSACorn Peanuts10 p8 p1/10 c1/8 c40.40 1020.25 8Example Computation3. Peanuts is unit of exchange for corn Corn is unit of exchange for peanuts5. Mexico has the comparative advantage in corn5a. USA has the comparative advantage in peanuts4. Fill in comparative advantage table (unit of exchange per unit of good)MexicoUSACorn Peanuts0.4040.25 2MexicoUSACorn Peanuts10 p8 p1/10 c1/8 cUsing input per unit of output dataDetermining comparative advantageUsing cost per unit of output dataOutput per unit of input dataWe want the most possibleInput (cost) per unit of output dataWe want the least possibleMost output per unit of inputLeast input per unit of outputWhat does Bill give up to do a load of
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