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- I could make 20 Rubik's cubes or 20 board games, Phil.
- Nice, Bob. I could make 10 Rubik's cubes or 5 board games.
- Maybe if we use specialization and trade we can make more products.
- That's a good idea. Let's calculate our opportunity costs to see what we should do.
- My opportunity cost for making 1 Rubik's cube is 1 board game. My opportunity cost for making 1 board game is 1 Rubik's cube.
- It costs me 1/2 board took make 1 Rubik's cube and 2 Rubik's cube to make 1 board game.
- I have the absolute advantage in making both the Rubik's cube and board games.
- And I have the comparative advantage in making Rubik's cubes because I have the lowest oppurtunity cost.
- I should specialize in making Board games because I have the absolute advantage.
- I should specialize in making Rubik's cubes because I have the comparative advantage.
- With specialization we increased our total production value.
- Yeah, we did great!
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