 Answer on your warm up/exit ticket sheet:  Should the U.S. trade with people and businesses in other countries, or would it be better for people in the U.S. to make everything they consume for themselves?

 Take one card, but don’t show your card to others in the group!  Assess how happy you are with the item on your card; on the piece of paper provided, rank your satisfaction on a scale of 1 (lowest/worst) to 5 (highest/best)

 Now you may show others in your group what g/s you have and may trade if you would like  Rate the items you have now, after trading or not, using the scale from 1 to 5 again

 How many of you were happier after trading?

 You may trade with any of the students in the class  Visual 2 will show you what items are available in other groups – you are not required to trade!

 Rate the items you have now, after trading or not, using the scale from 1 to 5 again

 Did more people trade in Round 1 or Round 2?  Why did this occur?  Were you required to trade?  Did anyone have a higher rating in Round 1 or 2 without trading? If so, how could this happen?

 The number of items to trade remained the same in each round, but overall people seemed to be happier with the items they had at the end of Round 2 than at the end of Round 1. How could this be?

 Answer on your warm up/exit ticket sheet:  Based on the Trade Game, would you revise your answer to the warm up? Why or why not?  In case you forgot the question…  Should the U.S. trade with people and businesses in other countries, or would it be better for people in the U.S. to make everything they consume for themselves?

 Answer on your warm up/exit ticket sheet:  Excluding yesterday’s trade game, when is the last time you traded something? Why did you trade?

Today’s LEQ: Why do people specialize and trade?

 Trade is the voluntary exchange of g/s  When expected gains outweigh expected costs, people trade  Benefits > Costs  When countries specialize in what they can produce at the lowest cost then trade with others, both production and consumption increase

 Comparative Advantage = fundamental reason to trade  Countries specialize in production of g/s that can be produced at lower opportunity cost than a trade partner would have to pay to produce the same g/s  Opportunity cost = highest valued alternative that is given up when a choice is made  Pizza Shop Activity

 Absolute Advantage = when a worker in one country can produce more of a good than a worker in another country  Cell Phone / Microwave Activity Part 1  Country A had the absolute advantage in producing both cell phones and microwaves – Should they bother trading with Country B? If so, what should they focus on producing?  Cell Phone / Microwave Activity Part 1

 People voluntary exchange g/s because they expect to be better off after the exchange  Voluntary exchange among different countries gives broader range of choices in buying g/s  Like trade among ind'ls within one country, int’l trade promotes specialization and division of labor and increases output and consumption  Ind’ls and nations have a comparative advantage in the production of g/s if they can produce a product at a lower opp. Cost than other ind’ls/nations

 Answer on your warm up/exit ticket sheet: What is the major difference between comparative advantage and absolute advantage? Which is most important when deciding what a country should produce versus trade?