of consumers in the two countries In turn, consumers have responded to the prices charged by sellers of boats and trucks The two countries differ in their respective abilities to produce trucks and boats As we can see by looking at the intersection of the production possibilities curves with the vertical axes in Figure 17.3 "Comparative Advantage in Roadway and Seaside", Roadway is able to produce more trucks than Seaside If Roadway concentrated all of its resources on the production of trucks, it could produce 10,000 trucks per year Seaside could produce only 5,000 Now look at the intersection of the production possibilities curves with the horizontal axes If Roadway concentrated all of its resources on the production of boats, it could produce 10,000 boats Seaside could produce only 7,000 boats Because Roadway is capable of producing more of both goods, we can infer that it has more resources or is able to use its labor and capital resources more productively than Seaside When an economy or individual can produce more of any good per unit of labor than another country or individual, that country or person is said to have an absolute advantage Despite the fact that Roadway can produce more of both goods, it can still gain from trade with Seaside—and Seaside can gain from trade with Roadway The key lies in the opportunity costs of the two goods in the two countries The country with a lower opportunity cost for a particular good or service has a comparative advantage in producing it and will export it to the other country We can determine opportunity costs in the two countries by comparing the slopes of their respective production possibilities curves at the points where they are producing At point A in Panel (a) of Figure 17.3 Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 892