In lieu of this morning’s Conservative Economics thread, please visit this one, and assist!
Enjoy.
Let’s think about these in terms of individuals instead of nations and choices we all understand... like trying to decide whether to become a fry cook or a heart surgeon. (That’s a debate we have internally just about every single day.)
Let’s say you’re a wonderful fry cook and a talented heart surgeon. Your neighbor is a pretty good fry cook and (since he is near-sighted and has a severe hand tremor) an absolute butcher as a surgeon.
You have an absolute advantage over your neighbor as a fry cook. He just can’t hang with you around a pan of sizzling lard. And you also possess an absolute advantage over him as a surgeon—your patients actually survive their surgeries occasionally.
Which career should you pursue? To become a fry cook, you must sacrifice your far more lucrative work as a heart surgeon; your opportunity cost is very high. On the other hand, your moderately skilled fry-cooking neighbor has a relatively low opportunity cost—to pursue a career as a fry cook he only has to sacrifice his malpractice-suit-waiting-to-happen career as a surgeon. Therefore your neighbor has a comparative advantage in fry cooking... even though you’re objectively a better fry cook than he is.
