<p>Let's say that given the same resources,</p>

<p>company A can produce 40 pens or 50 pencils,</p>

<p>company B can produce 30 pens or 30 pencils.</p>

<p>Since A has a comparative advantage in pencils, A decides to produce 50 pencils while B agrees to produce 30 pens. They trade 10 of A's pencils for 9 of B's pens.</p>

<p>Over time, A forgets how to make pens and B forgets how to make pencils. Does it still make sense for them to trade? Would it have made sense for them to trade if A never knew how to make pens and B how to make pencils? Since the situations of 'forgetting' and 'never knowing' are essentially the same.</p>

<comparative-advantage>
Does comparative advantage sustain over long periods of time?
Arnab Chowdhury
# Does comparative advantage sustain over long periods of time?

(Asked by: username_0 on 2020-04-02)

Let's say that given the same resources,

company A can produce 40 pens or 50 pencils,

company B can produce 30 pens or 30 pencils.

Since A has a comparative advantage in pencils, A decides to produce 50 pencils while B agrees to produce 30 pens. They trade 10 of A's pencils for 9 of B's pens.

Over time, A forgets how to make pens and B forgets how to make pencils. Does it still make sense for them to trade? Would it have made sense for them to trade if A never knew how to make pens and B how to make pencils? Since the situations of 'forgetting' and 'never knowing' are essentially the same.

**Tags:** comparative-advantage


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