Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define absolute advantage and comparative advantage and explain how they differ. (Guide: “Absolute advantage and comparative advantage”; Practice Q1)
- I can explain why a producer can have an absolute advantage in both goods but not a comparative advantage in both. (Guide: “Absolute advantage and comparative advantage”; Practice Q3)
- I can explain why equal opportunity costs leave no gains from trade. (Practice Q7(a))
Calculation
- I can find absolute advantage from output data, input data or PPC intercepts. (Guide: Worked examples 1 and 3; Practice Q1, Q3, Q5(b))
- I can calculate opportunity costs from an output table or a straight-line PPC. (Guide: Worked example 1; Practice Q2, Q6(a))
- I can calculate opportunity costs from an input (hours per unit) table, putting the right good on top. (Guide: Worked example 3; Practice Q3, Q5(c))
- I can state the range of mutually beneficial terms of trade and test given terms against it. (Guide: “Specialisation and the terms of trade”; Practice Q4, Q5(d), Q7(b))
- I can calculate each side’s consumption after specialisation and trade, and its gain. (Guide: Worked example 2; Practice Q6(d))
Reasoning and graphs
- I can draw a labelled PPC and show a consumption point beyond it after trade. (Guide: Figure 1; Practice Q6(e))
- I can explain why a producer would refuse terms of trade outside the range. (Guide: “Specialisation and the terms of trade”; Practice Q7(c))
- I can explain that trade lets a country consume beyond its PPC without shifting the PPC. (Guide: Worked example 2 and “Common misconceptions”)
All ticked? Move on to Topic 1.4, Demand, or return to the course roadmap.