# data[].attributes.attachment_link.readable_text
Right, the "what you get paid for it" type of answer assumes a subjectivist theory of value, or of what are the kinds of things which are good. This is an assumption made by all economists. For them "how do you know how much better your work is than other people's?" reduces to "how much do you and other subjects want your work / are willing to pay for it?". Imagine there were no obstacles against using markets: no transaction costs of adevrtising what I do to all people, and no transactions costs for anyone to bid for my work. Then, I would sell my work to the highest bidder and my pay would reflect the value of my comparative advantage. Then, everyone would be "around me" and i would be around everyone. In this scenario, my pay would reflect how good I am with regards to everyone else, because everyone else is competing with me and yet my demanders choose to pay you rather than anyone else. This is true even if the service I supply is dubious. The group of those who dislike what I do pays me less to not do it than the group who pays me to continue doing it. The net value measures my worth.
In the video however, everyone already agrees than bananas and fish are good. If catching fish is good, then, since your opportunity cost of making one fish is one third of a banana, and my opportunity cost is a whole banana, then you are objectively better than I am.

# data[].attributes.attachment_link.title
Comparative Advantage | Microeconomics Videos

# data[].attributes.attachment_link.description
Right, the "what you get paid for it" type of answer assumes a subjectivist theory of value, or of what are the kinds of things which are good. This is an assumption made by all economists. For them "how do you know how much better your work is than other people's?"

# data[].attributes.attachment_link.readable_text
With regard to the practice question:
"There are 1 million hours of labor available for making cars in the North, and another 1 million hours of labor available for making cars in the South. In a no-trade world, let's assume that two-thirds of the auto industry labor in each region is used to make high-quality cars and one-third is used to make low-quality cars. What will be the global output of low-quality cars?"
---
North produces 16,666.67 low quality cars (333,333.33 hours / 20 hours per low quality car)
South produces 11,111.11 low quality cars (333,333.33 hours / 30 hours per low quality car)

As neither 66% of a car nor 11% of a car is 'a car', I believe the correct answer to the question should be 27,777 cars (16,666 whole cars produced in North, and another 11,111 produced in South).

This minor quibble about rounding aside, I'm very much enjoying your my way though the videos. Thank you very much for taking the time to make them.

# data[].attributes.attachment_link.title
Comparative Advantage Homework | Microeconomics Videos

# data[].attributes.attachment_link.description
With regard to the practice question: "There are 1 million hours of labor available for making cars in the North, and another 1 million hours of labor available for making cars in the South. In a no-trade world, let's assume that two-thirds of the auto industry labor in each region is used to make high-quality cars and one-third is used to make low-quality cars.

# data[].attributes.attachment_link.readable_text
What can a small, isolated island economy teach the rest of the world about the nature and causes of the wealth of nations? When Tasmania was cut off from mainland Australia, it experienced the miracle of growth in reverse, as the reduction in trade and human cooperation forced its inhabitants back to the most basic ways of living. In an economy with a greater number of participants trading goods and services, however, there are more ways to find a comparative advantage and earn more by creating the most value for others. Let's join Bob and Ann as they teach us the "Story of Comparative Advantage" like you've never seen it before.

# data[].attributes.attachment_link.title
Comparative Advantage and the Tragedy of Tasmania | Marginal Revolution University

# data[].attributes.attachment_link.description
What can a small, isolated island economy teach the rest of the world about the nature and causes of the wealth of nations? When Tasmania was cut off from mainland Australia, it experienced the miracle of growth in reverse, as the reduction in trade and human cooperation forced its inhabitants back to the most basic ways of living.

# data[].attributes.attachment_link.title
Comparative Advantage and Trade - Macro Topic 1.3 (Micro Topic 1.4)

# data[].attributes.body
Define absolute advantage and comparative advantage.

Determine (using data from PPCs or tables as appropriate) absolute and comparative advantage.

Explain (using data from PPCs or tables as appropriate) how specialization according to comparative advantage with appropriate terms of trade can lead to gains from trade.

Calculate (using data from PPCs or tables as appropriate) mutually beneficial terms of trade.

# data[].attributes.body
The consequences of scarcity can be mitigated through specialization in production and by exchange.

# data[].attributes.body
Absolute advantage describes a situation in which an individual, business, or country can produce more of a good or service than any other producer with the same quantity of resources.

Comparative advantage describes a situation in which an individual, business, or country can produce a good or service at a lower opportunity cost than another producer.

Production specialization according to comparative advantage, not absolute advantage, results in exchange opportunities that lead to consumption possibilities beyond the PPC.

Comparative advantage and opportunity costs determine the terms of trade for exchange under which mutually beneficial trade can occur.

# data[].attributes.attachment_link.title
The Big Ideas of Trade | Microeconomics Videos

# data[].attributes.attachment_link.description
We discuss the importance of specialization and division of knowledge, and how specialization leads to improvements in knowledge and productivity.

# data[].attributes.attachment_link.title
APMic Comparative Advantage Practice Set

# data[].attributes.body
1. What is absolute advantage?

2. What is comparative advantage, and what is the difference between absolute advantage and comparative advantage?

3. Given appropriate data, can you determine which person/firm/country has comparative advantage in the production of a product?

4. Can you calculate acceptable terms of trade?

5. Can you determine which person/firm/country should import which good?

6. If the problem is phrased in terms of differing quantities of inputs to produce the same number of outputs, can you still accurately determine comparative advantage?

7. Can you solve this problem by determining absolute and comparative advantage, who should export what, and what constitutes acceptable terms of trade?

# data[].attributes.attachment_link.title
APMic Comparative Advantage Practice Set KEY

# data[].attributes.attachment_link.readable_text
If you're seeing this message, it means we're having trouble loading external resources on our website.

If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked.

To log in and use all the features of Khan Academy, please enable JavaScript in your browser.

About this unit

In any economy, the existence of limited resources along with unlimited wants results in the need to make choices. In this unit, we introduce concepts of opportunity costs and trade-offs, and illustrate these concepts by using the production possibilities curve. We then consider how different types of economies determine which goods and services to produce, how to produce them, and to whom to distribute them. This unit also covers why and how specialization and exchange increase the total output of goods and services, with a discussion of absolute and comparative advantage. Finally, we touch on the importance of property rights, the role of incentives in the functioning of free markets, and the principle of marginal analysis.

AP® is a registered trademark of the College Board, which has not reviewed this resource.

# data[].attributes.attachment_link.title
Basic Economic Concepts | AP®︎/College Microeconomics | Khan Academy

# data[].attributes.attachment_link.description
In any economy, the existence of limited resources along with unlimited wants results in the need to make choices. In this unit, we introduce concepts of opportunity costs and trade-offs, and illustrate these concepts by using the production possibilities curve.

# data[].attributes.attachment_link.title
AP Microeconomics: 1.4 Comparative Advantage and Trade