alrite..well its pretty simple once u do a couple of examples
ok in the town of BOS:
there is James and Kate
James can make 50 pizza's a day, and can make 20 beers a day
Kate can make 30 pizza's a day, and can make 15 beers a day
Remember, a person has a comparative advantage in something if their opportunity cost of performing that activity is lower than the other person.
In this example, James can make 50 pizzas for every 20 beers = 2.5 pizza's for every 1 beer, and Kate can make 30 pizzas for every 15 beers, = 2 pizza's for 1 beer
Therefore, Kate has a comparative advantage in making beer, because her opportunity cost of making 1 beer is only 2 pizza's, which is lower than James' cost, which is 2.5 pizza's.
And with the principle of comparative advantage, in a two-person economy such as this example, if Person A has a comparative adcvnatage in one activity, the other person MUST has a comparative advantage in the OTHER activity. Therefore, in this example, by law, James has a comparative advantage in making pizza's (u can prove this by maths again)
