Everyday comparative advantage problems come down to one relationship between output per unit labor for good a, output per unit labor for good a, output per unit labor for good b and output per unit labor for good b. This calculator turns those numbers into comparative advantage for good a and comparative advantage for good b, with the working shown so you can check the result rather than simply trust it.
What Is the Comparative Advantage Calculator?
The comparative advantage calculator takes output per unit labor for good a, output per unit labor for good a, output per unit labor for good b and output per unit labor for good b and turns them into comparative advantage for good a and comparative advantage for good b.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the Comparative Advantage Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with output per unit labor for good a set to 10, output per unit labor for good a set to 5, output per unit labor for good b set to 2, the calculator returns comparative advantage for good a of 0.2, and comparative advantage for good b of 5, and comparative advantage for good a (comparative advantage 1y) of 20. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out comparative advantage for good a?
Enter output per unit labor for good a, output per unit labor for good a, output per unit labor for good b and output per unit labor for good b. The calculator then works through the relationship and reports comparative advantage for good a and comparative advantage for good b.
What does the comparative advantage actually calculate?
It takes output per unit labor for good a, output per unit labor for good a, output per unit labor for good b and output per unit labor for good b and converts them into comparative advantage for good a and comparative advantage for good b using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter output per unit labor for good a?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Is the answer exact?
It is as exact as the formula and the inputs allow. The method itself is the standard one for this problem, so the only sources of error are the figures you enter and the precision you ask for.
Why does a small change in one value move the answer so much?
That happens when an output depends on a ratio, because dividing by a small number magnifies any change in it. Check the units first, then check whether the value you entered is in the range the relationship was designed for.