Opportunity Cost Review Take 2 minutes: What does “there is no such thing as a free lunch mean” to you?

Opportunity Cost Review Opportunity Cost: the next best alternative Trade-off: Any alternative that must be given up

LSHS Menu Nachos Peanut Butter and Jelly Sandwich Chicken Fingers Caesar salad Ham and cheese sandwich Rank your choice from 1-5 What was your opportunity cost? What was your trade-off?

Opportunity Cost Review What does there is no such thing as a free lunch mean to…. 1. Georgia? 2. Other Competing States?

Notes –Comparative v. Absolute SSEIN1a- Define and compare absolute and comparative advantage SSEIN1b-Explain that most trade takes place b/c of comparative advantage

What is trade? Trade is the voluntary exchange of goods and services.

Voluntary Exchange People only exchange goods and services when it benefits them OR marginal benefits outweigh marginal costs When costs are greater than the benefits people stop trading Both parties gain!

Why trade? People and organizations in different countries often trade goods and services because they value the things they buy more than they sell

Exports and Imports Export: Goods that a nation sells to other countries Import: goods that a nation buys from other nations

Types of advantages Comparative Advantage Absolute advantage Producing a good because you have a lower opportunity cost. You can produce a good with fewer resources than another country. This means you can produce more goods and services more efficiently than another country.

Comparative Advantage Comparative advantage allows countries to specialize.

Benefits of Trade Benefits 1. Increase in competition 2. Increases the variety of goods and services 3. Spreads knowledge and education 4. Spreads new technologies and production methods