Comparative Advantage Calculator

Enter the quantity of a good or raw material in two different countries to calculate the comparative advantage.

Comparative Advantage Formula

The following formula is used to calculate the comparative advantage.

CA = A/B

  • Where CA is the comparative advantage of raw material A to good B.
  • A is the quantity of raw material in country A.
  • B is the quantity of raw material in country B.

Comparative Advantage Definition

A comparative advantage is a measure to monetary advantage a country has over another country due to it’s natural resources.


Comparative Advantage Example

How to calculate comparative advantage?

  1. First, determine the quantity of raw material in the first country.

    For this example, we will say the US has 100 million barrels of oil available to sell or use.

  2. Next, determine the quantity of raw material in the second country.

    We will say that we are comparing the US to Canada and Canada as 50 million barrels of oil available.

  3. Finally, calculate the comparative advantage.

    Using the formula we calculate the comparative advantage the US has to Canada with respect to oil as 2 or 2:1 ratio.

FAQ

What is a comparative advantage?

A comparative advantage is the ratio of the quantity of two different raw materials available to a country. It can also be used to compare the availability of raw material of different countries. For example, the comparative advantage of the supply of oil between the US and Canada.



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