Description
Divide homeFirst by homeSecond and foreignFirst by foreignSecond for opportunity costs.
Economic models simplify behavior through supplied technologies, coefficients, elasticities, or baselines. A calculated term reflects those assumptions rather than estimating them or proving causation.
Divide homeFirst by homeSecond and foreignFirst by foreignSecond for opportunity costs.
When to use this tool
Use Comparative Advantage Cost Ratio Gap when you need one explicit economic-model term.
How to use the tool and how it works
- Enter homeFirst, homeSecond, foreignFirst, foreignSecond. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read homeOpportunityCost, foreignOpportunityCost, gap, homeAdvantage. Inspect homeAdvantage before interpreting the associated values.
Divide homeFirst by homeSecond and foreignFirst by foreignSecond for opportunity costs. Return their difference and homeAdvantage only when the home ratio is smaller.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| homeFirst | Home First | Required. Finite number; strictly above 0. |
| homeSecond | Home Second | Required. Finite number; strictly above 0. |
| foreignFirst | Foreign First | Required. Finite number; strictly above 0. |
| foreignSecond | Foreign Second | Required. Finite number; strictly above 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| homeOpportunityCost | Home Opportunity Cost | Required. Finite number. |
| foreignOpportunityCost | Foreign Opportunity Cost | Required. Finite number. |
| gap | Signed difference under the stated subtraction order. | Required. Finite number. |
| homeAdvantage | Home Advantage | Required. Boolean. |
{
"input": {
"homeFirst": 2,
"homeSecond": 4,
"foreignFirst": 3,
"foreignSecond": 3
},
"output": {
"homeOpportunityCost": 0.5,
"foreignOpportunityCost": 1,
"gap": -0.5,
"homeAdvantage": true
}
}Limitations and assumptions
- All requirements are positive and must use comparable good and factor units; equal ratios give no strict advantage and actual trade outcomes are not predicted.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Estimate and validate a complete model using suitable data and report its assumptions and uncertainty.
References
Similar or alternative tools
- Ricardian Opportunity Cost Two Goods Term
Divide each positive labor-per-good requirement by the other for reciprocal opportunity costs.
- Gravity Trade Economic Mass Term
Raise positive GDP inputs to their supplied elasticities, multiply by nonnegative coefficient, and divide by distance raised to distanceElasticity.