Example Table: Comparative Advantage
| Hours needed to produce one |
Country A |
Country B |
| Car |
100 |
150 |
| Computer |
50 |
25 |
| Ratio Car / Computer |
2 |
6 |
| Ratio Computer/Car |
0.5 |
1/6 |
We observe that:
- Country A has an absolute advantage in car. Country B in computer production.
- According to David Ricardo's theory of comparative advantage, countries should specialize in production where they have a comparative advantage, i.e., where they are relatively more efficient in terms of opportunity cost. In this case, Country A should specialize in car production, while Country B should specialize in computer production.