Why can B still buy rice though its rice hours are longer?

Because comparative advantage is about cloth sacrificed, not hours: growing rice costs B more than buying it from A.

At what freight level does trade stop?

When A's opportunity cost plus freight exceeds B's own opportunity cost, B switches back to producing at home.

S6 Economics | International Trade and Comparative Advantage Paper 4 (Mistake Review)

2026-11-04

No new theory here: this paper reworks the four judgements students get wrong most often, namely treating absolute advantage as comparative advantage, reversing opportunity costs, mis-stating the range of the terms of trade, and forgetting that freight changes the landed cost.

Attempt first, mark afterwards　Allow about twenty minutes; for each item write down how much of the other good one unit costs before answering, and keep decimals to two places.

01　Paper details (check answers afterwards)

Item	Detail
Questions	10 items
Suggested time	About 20 minutes
Difficulty mix	Foundation 4 · Intermediate 3 · Challenge 2 · Error redo 1
Chapter	Chapter: S6 Economics \| International Trade and Comparative Advantage
Level	S6 (Secondary 6) Economics

02　Questions (10 items)

FoundationIn country A one unit of rice takes 3 hours and one unit of cloth takes 6 hours; in country B the figures are 4 and 2. In which good does each country have an absolute advantage?
FoundationWhat is A’s opportunity cost of one unit of rice?
FoundationWhat is B’s opportunity cost of one unit of cloth?
FoundationAccording to comparative advantage, how should the two countries specialise?
IntermediateEach country has 12 hours and splits them equally between rice and cloth. How much more does fully specialised production give in total?
IntermediateWhat range of terms of trade, in units of cloth per unit of rice, will both sides accept?
IntermediateIf one unit of rice trades for one unit of cloth and one unit of rice changes hands, what does each country end up with, and how does that compare with autarky?
ChallengeTechnology in B improves so that one unit of cloth takes 1.5 hours instead of 2, with rice hours unchanged. What is B’s new opportunity cost of rice, and does this help or hurt A?
ChallengeFreight per unit of rice is 0.6 cloth at first and then 1.8 cloth. Does A’s rice still compete in B in each case, compared with B’s own 2 cloth?
Error redoA classmate says: A needs only 3 hours for rice against 4 in B, so after specialisation B should not buy rice at all. What is wrong?

03　Answers and one-line notes

#	Answer	One-line note
1	A in rice (3 against 4 hours) and B in cloth (2 against 6 hours)	Absolute advantage compares hours for the same good: rice takes 3 hours in A against 4 in B, while cloth takes 2 hours in B against 6 in A, so each country leads in one good.
2	0.5 units of cloth	One unit of rice takes 3 hours, and those same 3 hours would weave 3 divided by 6 = 0.5 units of cloth, so 0.5 units of cloth are given up.
3	0.5 units of rice	One unit of cloth takes 2 hours, which would instead grow 2 divided by 4 = 0.5 units of rice, so the cost of cloth is 0.5 units of rice.
4	A in rice and B in cloth	A makes rice at 0.5 cloth against B’s 2, while B makes cloth at 0.5 rice against A’s 2, so each produces what it sacrifices least for.
5	0.5 more rice and 2 more cloth	Before specialisation A has 2 rice and 1 cloth and B has 1.5 rice and 3 cloth, a joint 3.5 rice and 4 cloth; full specialisation gives 4 rice and 6 cloth, a gain of 0.5 rice and 2 cloth.
6	From 0.5 to 2 units of cloth	The floor is exporter A’s domestic cost of 0.5 cloth and the ceiling importer B’s cost of 2 cloth; beyond either side it is cheaper to produce at home.
7	A ends with 3 rice and 1 cloth (up 1 rice); B ends with 1 rice and 5 cloth (down 0.5 rice, up 2 cloth)	A sells 1 rice for 1 cloth and keeps 3 rice and 1 cloth, while B sells 1 cloth for 1 rice and holds 1 rice and 5 cloth; one cloth per rice lies inside 0.5 to 2, so both beat autarky.
8	2.67 units of cloth; it helps A	B’s cost of rice rises from 2 to 4 divided by 1.5 = 2.67 cloth, raising the ceiling on what A can charge for rice, while the floor stays at A’s own 0.5 cloth.
9	At 0.6 freight the landed cost is 1.1 cloth so trade continues; at 1.8 freight it is 2.3 cloth, above 2, so trade stops	Landed cost is A’s 0.5 cloth plus freight: 0.5 plus 0.6 gives 1.1, below 2, so buying still pays; 0.5 plus 1.8 gives 2.3, above 2, so B grows its own.
10	It confuses absolute with comparative advantage: B sacrifices 2 cloth per rice against A’s 0.5, so buying rice is cheaper for B than growing it.	Absolute advantage counts hours while comparative advantage counts what is given up; B’s cost of rice is 2 cloth against A’s 0.5, so A should grow the rice and B should buy it.

04　What to do after marking

After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
Repeat the same item two days later; move to the next paper only when both attempts are correct.
Parents only need the answer and note columns; there is no need to explain every item.

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