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Module 1.3
could trade 1 million tons of pork for 1,500 aircraft from Canada. This would allow
both countries to consume at a point outside of their production possibilities curves.
Moreover, these mutual gains don’t depend on each country’s being better at pro-
ducing one kind of good. Even if, say, one country has remarkably productive workers
who give it an absolute advantage in both industries, there are still mutual gains from
trade.

Adventures in
®
AP Economics
Module 1.3 Review Watch the video:
Comparative Advantage and
Absolute Advantage

Check Your understanding

1. In the country of Imsmall, an automobile can be c. Which country has an absolute advantage in the
produced by 8 workers in one day and a washing production of automobiles? in washing machines?
machine by 3 workers in one day. In the country of d. Which country has a comparative advantage in the
Sosmall, an automobile can be produced by 6 workers in production of washing machines? in automobiles?
one day, and a washing machine by 2 workers in one day. e. What type of specialization results in the greatest
Suppose each country has 24 workers. gains from trade between the two countries?
a. How many automobiles could each country make if 2. Refer to the story of Alexis and Jacob illustrated by
it made nothing else? Figure 1.3-1 in the text. Explain why Alexis and Jacob are
b. How many washing machines could each country willing to engage in a trade of 1 fish for 1½ coconuts.
make if it made nothing else?

®
Tackle the AP Test: Multiple-Choice Questions

Refer to the graph below to answer questions 1–6. 2. For Country A, the opportunity cost of a bushel of
wheat is
Quantity of a. ⁄2 unit of textiles.
1
wheat (bushels) b. ⁄3 unit of textiles.
2
200 1
Country A’s PPC c. 1 ⁄3 units of textiles.
1
d. 1 ⁄2 units of textiles.
e. 2 units of textiles.
100 3. Use the graph to determine which country has a
Country B’s PPC comparative advantage in producing each good.
Comparative advantage in Comparative advantage in
wheat production textile production
a. Country A Country B
0 100 150
Quantity of textiles (units) b. Country A Country A
c. Country B Country A
1. Use the graph to determine which country has an d. Country B Country B
absolute advantage in producing each good. e. Country A Neither country
Absolute advantage in Absolute advantage in textile 4. If the two countries specialize and trade, which of the
wheat production production
a. Country A Country B choices below describes the countries’ imports?
b. Country A Country A Import wheat Import textiles
c. Country B Country A a. Country A Country A
d. Country B Country B b. Country A Country B
e. Country A Neither country c. Country B Country B
d. Country B Country A
e. Neither country Country B

Module 1.3 Review 25
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