Description
Divide each positive labor-per-good requirement by the other for reciprocal 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 each positive labor-per-good requirement by the other for reciprocal opportunity costs.
When to use this tool
Use Ricardian Opportunity Cost Two Goods Term when you need one explicit economic-model term.
How to use the tool and how it works
- Enter laborPerFirst, laborPerSecond, availableLabor. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read firstCostInSecond, secondCostInFirst, maximumFirst, maximumSecond. Use the output convention below.
Divide each positive labor-per-good requirement by the other for reciprocal opportunity costs. Divide availableLabor by each requirement for single-good maximum outputs.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| laborPerFirst | Labor Per First | Required. Finite number; strictly above 0. |
| laborPerSecond | Labor Per Second | Required. Finite number; strictly above 0. |
| availableLabor | Available Labor | Required. Finite number; minimum 0. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| firstCostInSecond | First Cost In Second | Required. Finite number. |
| secondCostInFirst | Second Cost In First | Required. Finite number. |
| maximumFirst | Maximum First | Required. Finite number. |
| maximumSecond | Maximum Second | Required. Finite number. |
{
"input": {
"laborPerFirst": 2,
"laborPerSecond": 4,
"availableLabor": 100
},
"output": {
"firstCostInSecond": 0.5,
"secondCostInFirst": 2,
"maximumFirst": 50,
"maximumSecond": 25
}
}Limitations and assumptions
- This assumes a simple linear labor-only technology; feasible mixed production, demand, and actual trade gains are not solved.
- 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
- Comparative Advantage Cost Ratio Gap
Divide homeFirst by homeSecond and foreignFirst by foreignSecond for 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.