The battle between two friends producing lip gloss and bonnets
Storyboard Text
- Hey Alexis! How is your business with the lip gloss and bonnets coming along?
- Hi Samantha! It's coming along just fine... How about you?
- That's great! the business is doing good. I make 40 lip gloss per day and 10 bonnets per day.
- That's awesome! I make 30 lip gloss per day and 15 bonnets per day
- Wow! well it seems like you have an absolute advantage when producing bonnets and I have an advantage when it comes to producing lipgloss.
- Yes! but I feel like if we look at our relative prices per lip gloss or bonnet, I bet you will have a comparative advantage.
- What does that mean?
- It's basically the relative price of goods, which attributed the cause and benefits of international trade that emerges from exchange and specialization
- Is it okay if you show me an example of that?
- Sure! I can use our own numbers of the lip gloss and bonnet production
- Okay! that sounds good
- Alright! so we need to calculate the opportunity cost of lip gloss in connection with bonnets, which is 40 lip gloss per day / 10 bonnets per day. That's equals to .25 bonnet per lip gloss.
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