Comparative advantage can be applied to people as well as countries.  It says, in effect, that it is best for everyone when people concentrate on doing the one thing they do best.  If fixing things is your specially, for instance, that is what you should do.  It doesn't matter that other people may be better at fixing things than you are.  But if you are also an artist, you may have to decided which of your two skills is your comparative advantage.  This will depend in part on other people's strengths and the value that society places on your skills.  You must ask yourself which of the things you can produce is worth more in trade.  This activity shows how the skills of a country's residents help to define its comparative advantage.

     Comparative advantage is a difficult concept to understand.  Pretend for this activity that it is possible to predict the future accurately, that the tests really measure your skills, and that wages in the four skill areas are about the same.  (Don't be discouraged if some of the tests seem hard compared to the others.  The activity won't work if everyone has a perfect score on each test.)

1.  You have been divided into four groups.  Each group represents a country whose goal is to decide which of its resources should be developed for trade.  Your own abilities, which will be tested in this activity, are the resources your country can choose to develop.

2.     Economists predict four skill areas that will be in great demand for the next twenty years.  The skills are service skills, sales skills, computer skills, and bureaucratic skills.  Your country will determine which it should focus on by having all of its citizens tested for their ability in each of the four skill levels.

     Each corner of the classroom should be designated as the testing center for determining ability in one of the four skill areas.  There will be four ten-minute testing sessions timed by the teacher.  This will insure that you have enough time to go to all four corners to be tested in all four skill areas.  If you finish any test early, you may move on to the next corner.  Instructions explaining how the tests are to be administered follow.

Corner #1     SERVICE SKILLS

  • Your service ability will be measured by what kind of person you seem to be.
  • Introduce yourself to someone else in the corner and convince that person that you can be trusted.
  • This person must dcide how much confidence she or he has in you and, consequently, how much you might be able to help her or him.  She or he will rate you on a scale from 1 to 10.  10 being the highest grade possible.
Corner #2     SALES SKILLS
  • Your sales ability is measured by how effective a one-minute sales pitch you can come up with is.
  • Go up to one person in this corner and give him or her a one-minute sales talk on a product he or she has randomly chosen.
  • This person will rate your sales ability on a scale of 1 to 10 by deciding your effectiveness in convincing him or her to buy your product.
  •  Your ability to work in a bureaucracy is measured by how well you can alphabetize eight words and apply a rule to three cases.
  • The teacher or a student volunteer acts as tester in this corner.  THe tester gives a copy of the test to you and corrects it when you have finished.
  • You will receive a half point for each word alphabetized correctly and two points for each question correctly answered.
  • Your computer ability is measured by how well you perform on a mathematics test.
  • A teacher or student volunteer will have to administer this test.
  • You will receive one point for every correct answer.
Center of the Classroom

     You must take at least two of the skills tests.  If you decide not to take the others, you can spend the testing time in the center of the classroom.  While there, you must create your own job category, test, and rating scale.

4.  After you have taken your ability tests, meet with the other members of your country.  Everyone should fill in the following ability score chart on a separate piece of paper and drop it into a hat or box.  Charts can remain nameless.  If you didn't take a certain test, then you should write in a 9 as your score.

 5.  Your country must now computer a productivity score for each of its potential resources by adding up the individual scores for each resource.

     It is not necessary to include alternative service scored unless the scores are particularly significant.  Complete the following chart or copy the chart on a separate piece of paper.

 6.  Based on its productivity scores, decide what would be best for your country to concentrate on developing.

7.  Discussion questions for each country to ask itself: 

  • Should you do only what you do only what you do better than anybody else, following your absolute advantage?
  • Should you do only what you can do best, following your comparative advantage?
  • Should you try to be self-sufficient, producing everything? 

8.  All four countries should decide next what it would be best for each country to produce.  Copy the following comparative advantage chart on the board and fill in the necessary information.

From Geography: Focus on Economics, @ Council for Economic Education, New York, NY

Why Nations Trade: Economics Lesson