Two Workers, Two Tasks

Written by Studio AM.

Imagine two people preparing meal boxes and making signs for an event. In one hour, Ava can prepare twelve boxes or make six signs. Ben can prepare six boxes or make two signs. Assume each person's speed stays constant and they can divide their working time between the tasks. Ava is more productive at both.

Now compare what they give up. For Ava, making one sign uses time that could produce two meal boxes. For Ben, one sign costs three boxes. Ava therefore has the lower opportunity cost for signs. Looking the other way, Ben gives up fewer signs for each meal box.

This difference creates a possible gain from exchange. Suppose Ava makes two signs for Ben, and Ben prepares five meal boxes for Ava. The signs cost Ava the time needed for four boxes, so receiving five is a gain. Making two signs himself would cost Ben six boxes, so giving up five is also better. Their sacrifice differs even though Ava is faster at both tasks.

Economists call this comparative advantage. It compares what each producer gives up, not just absolute speed. Similar reasoning helps explain trade between countries, though transport costs, changing jobs and other real-world conditions affect the outcome.

Questions

Choose an answer. The explanation appears after you answer.

  1. Question 1 of 4

    What is the central claim of the passage?

  2. Question 2 of 4

    How do Ava's hourly outputs compare with Ben's?

  3. Question 3 of 4

    Why would Ben prefer giving Ava five meal boxes for two signs to making those signs himself?

  4. Question 4 of 4

    As used here, "sacrifice" means

Score: none answered yet.

More passages

Practise reading