Homework/Announcements Thursday April 9, 2015 Agenda Homework/Announcements Finish Posters Present Posters 3 Question Review Globalization and Trade Notes Progress Reports Tomorrow

Civics and Economics Day 134

Posters You have 5 minutes to find your poster, put on the finishing touches and be prepared to tell everyone about your industry.

North Carolina Economy Activity Agriculture Contemporary Finance High-tech research Furniture/Manufacturing Leisure/Hospitality/Tourism

Industry Questions Will your industry continue to exist in North Carolina? If so will it face any challenges or difficulties? Why is your industry important to North Carolina? Why is your industry important to the World?

Which industry is most important to WC? Why? Which industry is most important to NC? Why? Which industry is most important to the World?

Review What is the difference between limited and unlimited liability? What is the difference between Monopoly and Oligopoly? Why does price matter so much in a pure competition?

Globalization and Trade notes

Where was McDonalds Founded? 1948 in California

Where is this? What restaurant is this?

Japan

Where is this?

Ponta Delgada, Azores (Portugal)

Where is this?

India

Where is this?

Romania

Where is this?

Asheville, North Carolina

Important Ideas in Globalization and Trade Economics? Opportunity Cost? Trade Off?

Globalization Name for the process of increasing the connectivity and interdependence of the worlds markets and businesses “Shrinking the world” through sharing of information, ideas Made Possible through TV and Internet!

Absolute Advantage Exists when a person/Country can produce more of a certain good/service than someone else in the same amount of time or can produce a good using the least amount of resources. Post Example: Student 1: Is the best artist and has the best handwriting Student 2: Has decent handwriting but is a terrible artist. Should Student 1 do the whole project?

Bake Cakes Make Pizza Ms. Moody 2 cakes/hr. 6 pizzas/hr. Mr. Neanover Who has the absolute advantage in producing cakes? Mr. Neanover Who has the absolute advantage in producing pizza? Mr. Neanover So, would Neanover be better off if he specializes and trades?

Comparative Advantage A person or a nation has a comparative advantage in the production of a product when it can produce the product at a lower domestic opportunity cost than can a trading partner. Ex: You are in a group and making a poster. Student 1: Has great handwriting and is an ok artist Student 2: Is a good artist but has terrible handwriting. Which student should do which job?

Bake Cakes Make Pizza Ms. Cranston 2 cakes/hr. (1c = 3p) 6 pizzas/hr. Mr. Neanover should specialize and trade if he has a comparative advantage (lower opportunity cost) in the production of one of the products. Bake Cakes Make Pizza Ms. Cranston 2 cakes/hr. (1c = 3p) 6 pizzas/hr. (1p = 1/3c) Mr. Neanover 4 cakes/hr. (1c = 2p) 8 pizzas/hr. (1p = 1/2c) Mr. Neanover has a lower opportunity cost in producing cakes; therefore, he should specialize in the production of cakes. Ms. Cranston has a lower opportunity cost in producing pizza; therefore, she should specialize in the production of pizza.

Pinson will specialize in cakes. Terms of trade? Bake Cakes Pinson will specialize in cakes. Make Pizza Gray will specialize in pizzas. Ms. Cranston 1c = 3p For one cake, Moody would be willing to pay anything up to 3 pizzas. 1p = 1/3c For one pizza, Moody will want more than 1/3 cakes. Mr. Neanover 1c = 2p For one cake, Neanover will want more than 2 pizzas. 1p = 1/2c For one pizza, Neanover would be willing to pay anything up to ½ cake.

Another Example: Car Wash Interior of the Car Exterior of the Car Opportunity Cost:

Which is Better for the World? Comparative or Absolute? Answer: Comparative Advantage Comparative advantage is the basis for all trade between individuals, regions, and nations.

Interdependence Two or more people, companies, or countries that become dependent(need) on each other.