The Clothes We Wear
Updated: 1/17/2020
The Clothes We Wear
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Storyboard Text

  • Hey Joel! I heard we both are in the same business! I can make either 40 shirts or 10 pants but I prefer to make 20 shirts and 5 pants.
  • Hey Eric! That's cool and yes we are in the same business. Compared to you, I can only produce 15 shirts or 30 pants but I usually make 7.5 shirts with 15 pants.
  • Here, Eric has absolute advantage in shirts since he makes 25 more than Joel. Joel has absolute advantage in pants since he makes 20 more pants than Eric.
  • You know that you have comparative advantage since your opportunity cost of 1 pants is 1/2 a shirt. I have comparative advantage since my opportunity cost for 1 shirt is 1/4 of a pants.
  • I hope his idea is a real good idea....
  • Eric, if you specialize in making shirts and I specialize in making pants, we would be able to trade and have more goods!
  • With this division of labor, we can produce and trade so that I can have 25 shirts and 10 pants, and you can have 15 shirts and 20 pants!
  • With this, we would also have economic interdependence since I get my pants materials from China and you get your shirt materials from Italy, correct?
  • That is correct! Now with this trading, we both can increase in our products giving us much more!
  • Thank God we specialize in different things! This is going to be amazing thanks to trading!
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