Example
Developing country
Industrialized country
Computer
2
1
Calculator
3
2
Industrialized country has absolute advantage in producing both computer and calculator.
But in light of Ricardo’s theory, we also need to consider of opportunity cost and its comparative
advantage.
Opportunity costs for poor developing country and industrialized country
Developing country
Industrialized country
Computer
2/3
1/2
Calculator
3/2
2
To be details, to get opportunity cost of computer and calculator,
Developing country
1 computer needs 2 inputs
1 calculator needs 3 inputs
Opportunity cost of computer is 2/3 calculator
Opportunity cost of calculator is 3/2computer