01Model
Build the economic model
Comparative advantage arises from lower opportunity cost, allowing mutually beneficial specialisation even when one country has absolute advantage in both goods.
For international trade and comparative advantage, state the relationship between comparative advantage and the relevant agents, then identify the ceteris-paribus conditions. The model is a disciplined simplification, not a complete description of reality.
- Define the central variables precisely.
- Identify the agents making decisions.
- State what is held constant and why that matters.
02Evidence
Apply evidence and data
Norwyn and Selvara have different relative productivity in software and agricultural equipment.
Application in international trade and comparative advantage means using scale, direction, timing and source to alter the argument. Explain how the evidence changes the mechanism instead of merely naming the context or copying a figure.
- Check units, dates and whether values are nominal or real.
- Separate correlation from a supported causal inference.
- Identify winners, losers and the appropriate counterfactual.
03Analyse
Develop the mechanism
Specialisation by comparative advantage → total potential output rises → exchange allows consumption beyond autarky possibilities → distribution depends on terms of trade and adjustment.
Carry this international trade and comparative advantage chain far enough to answer the question: identify the agent's response, the resulting market or macroeconomic change and why the outcome matters.
- Explain each arrow in the chain.
- Use the diagram or calculation in the written analysis.
- Distinguish short-run adjustment from longer-run response.
04Evaluate
Evaluate assumptions and magnitude
Transport, transition cost, imperfect mobility, scale economies, strategic risk and changing advantage can weaken a static two-country model.
Evaluation of international trade and comparative advantage should change confidence in the result. Test elasticity, time lags, scale, incentives, distribution and unintended effects rather than adding a generic “however”.
- Which assumption is most fragile?
- Would a different elasticity reverse or only weaken the result?
- What evidence could change the judgement?
05Judge
Reach an informed judgement
For international trade and comparative advantage, choose the argument with the greatest contextual importance and explain why it outweighs the alternative. State the conditions under which it holds rather than repeating the introduction.
The opportunity cost and distributional effect of comparative advantage matter. Political preferences may affect objectives, but the exam judgement must rest on transparent assumptions and evidence rather than ideology.
- Answer the exact command and scope.
- Rank the decisive factors.
- State a condition, timeframe and possible reason to revise the conclusion.
From theory to a testable claim
Comparative advantage arises from lower opportunity cost, allowing mutually beneficial specialisation even when one country has absolute advantage in both goods.
Applied taskNorwyn and Selvara have different relative productivity in software and agricultural equipment.
Causal chain
Specialisation by comparative advantage → total potential output rises → exchange allows consumption beyond autarky possibilities → distribution depends on terms of trade and adjustment.
Applied taskRewrite the international trade and comparative advantage chain with one piece of numerical or contextual evidence at the link where it changes the expected magnitude.
Evaluation that does work
Transport, transition cost, imperfect mobility, scale economies, strategic risk and changing advantage can weaken a static two-country model.
Applied taskExplain whether this consideration weakens, delays, redistributes or reverses the predicted international trade and comparative advantage outcome.