Abstract
This paper is on the economic concepts of opportunity costs, absolute and comparative advantages as well as the purpose of trades. The paper takes a scenario and using the data, analyzes the opportunity costs each person achieves as well as who has the absolute and comparative advantages between both products of corn and pigs. Also, using research from the book and the internet, I was able to tie in these concepts to international businesses and nations alike, determine the important of these concepts in the economy.

Opportunity costs are the true cost of anything that you have to give up (Krugman, 2009). We face decisions with the concept of opportunity costs in mind on a day to day basis; deciding whether to spend money on lunch or save it for another time. The opportunity costs in this situation are to have lunch to eat while giving up savings you can use for later.
According to the scenario given between Mary and John which both produces corn and pigs, we can see that for Mary, the opportunity cost for producing corn are ¼ pigs. We came to this deduction by taking the total amount of corn and dividing into 1. Taking the result of this number we multiply by the amount of pigs that’s produced. Mary can produce 200 corns per year or 50 pigs per year if all her resources are allocated respectively to either corn or pigs. Using the formula mentioned, we come up with ((1/200)*50) which results to .25 pigs. To find the opportunity cost of Mary producing pigs, we can use the same process but instead of diving into total corn by 1, we must divide total pigs by 1. Mary’s opportunity costs of producing pigs are 4 corns. In John’s case, while he can either produce 80 corns per year or 40 corns per year we can deduce that his opportunity cost of producing corn is .5 pigs and the opportunity cost of producing pigs is 2 corns.