CHAPTER 4 
COMPARATIVE COSTS 
WE turn now to Case III, that of differences in comparative 
costs. For convenience in following the numerical illustrations, 
[ shall use in the exposition that follows a different set of figures 
from those of the preceding chapters. The same principles are 
involved; the figures now used are selected for their greater 
simplicity. 
Let us suppose that 
In the U. S. 10 days’ labor produce 20 wheat 
2. * U.S. 108’ 4 3 20 linen 
” Germany i) » » 10 wheat 
” Germany 10 ” is 1 15 linen 
wa 
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Here the United States has an advantage in the production of 
both commodities. The effectiveness of her labor is greater both 
in wheat and in linen, but it is not greater to the same degree in 
both. In wheat it is as 20:10, while in linen it is as 20:15. 
The American effectiveness of labor in wheat is twice as great as 
that of Germany ; in linen it is one-third greater. There is in the 
United States a comparative advantage in the production of wheat. 
We might denote the situation by a different set of phrases. 
Instead of speaking of a comparative advantage, we might say that 
the United States has a superior advantage in wheat. She has an 
advantage in both commodities, but one greater in wheat than in 
linen. Germany, on the other hand, has an inferior disadvantage in 
linen. She is at adisadvantage in producing both commodities ; but 
the disadvantage is less in the case of linen than in that of wheat. 
The outcome of an inferior disadvantage in trade between countries 
(or for that matter between individuals, or between groups within 
a country) is precisely the same as that of a superior advantage. 
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