Absolute Advantage One person has an absolute advantage over another if he/she takes fewer hours to perform a task than the other person.

Slides:

Advertisements

Similar presentations

Basis for International Trade. What is trade? Exchange of goods and services between two countries.

Advertisements

Comparative Advantage: Even if one person is better, i.e., more efficient, at producing all goods than another person, trade can still be profitable for.

Chapter 2 (Briefly) The Principle of Comparative Advantage.

Mr. Mayer AP Macroeconomics Comparative Advantage.

Comparative advantage

AP Macroeconomics Comparative Advantage. Ricky Ricardo Lucy’s Cuban- American husband drumming on the bongo.

Mr. Gerdes’ AP Macroeconomics Comparative Advantage.

MBMC Comparative Advantage: The Basis for Exchange Comparative Advantage: The Basis for Exchange.

Comparative advantage Today: An introduction to the advantages of trade.

Ch. 4.3 How do People and Nations Benefit from Specialization & Trade?

Dishwashing (# of sink loads) Sweeping (# of trash loads) Betsy23 Bert11.

What is specialization? Specialization is when an individual or a company specializes in doing one part of a task, and relies on others to complete the.

Welcome to Econ 325 Economics of Gender Week 2 Beginning January 29.

Comparative Advantage, Absolute Advantage, Specialization and Trade

Warm-Up If you were a contractor building a new house, which people would you need to hire? Why wouldn’t one contractor just do everything on his/her own?

Comparative Advantage. US ECONOMY OTHER NATIONAL ECONOMIES Goods and services Capital and labor Information technology Money Global Economy with Trade.

Absolute v. Comparative Advantage Two countries: Bolivia and Canada Essential Question: What goods and services should an economy produce?

Basic Economic Concepts Unit 1 Comparative and Absolute Advantage.

GAINS FROM TRADE Specialization, Comparative, and Absolute Advantage.

What is Productivity. Productivity The amount of OUTPUT in a given time frame A total count of how many goods/services were produced in a given period.

Comparative Advantage and Globalization BIG IDEA – When regions and nations use comparative advantage to produce at the lowest cost and then trade with.

International Trade Trade between China and Italy ◦ China  makes everything cheaper, faster, better  why trade with Italy? Continuing growth of international.

2–12–1 Copyright  2005 McGraw-Hill Australia Pty Ltd PowerPoint® Slides t/a Principles of Macroeconomics by Bernanke, Olekalns and Frank Chapter 2 Comparative.

Warm Up Why do nations trade?. Tuesday, September 22, 2015 Objective: Students will be able to explain the concepts of absolute and comparative advantages.

Productivity, Absolute Advantage and Comparative Advantage, Specialization and Trade Unit 1 Lesson 3 by Advanced Placement Economics Teacher Resource Manual.

Comparative Advantage and the Gains from Trade © 2003 South-Western/Thomson Learning.

Absolute Advantage and Comparative Advantage, Specialization and Trade Absolute Advantage- One nation can produce more output with the same resources as.

AP Macroeconomics Comparative Advantage FRQ B #1; 2008 #3.

Ch 3 Review popcorn peanuts popcorn a.No trade; total production of popcorn and peanuts: Alpha 75 popcorn + Omega 150 popcorn.

Trade Theory Introducing Absolute and Comparative Advantage.

Chapter 2 section 3 Absolute Advantage means being able to do something using fewer resources than other producers require. Law of comparative advantage,

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

C H A P T E R 2: The Economic Problem: Scarcity and Choice © 2004 Prentice Hall Business PublishingPrinciples of Economics, 7/eKarl Case, Ray Fair 1 of.

Chapter 2 Review We know how to add and subtract!.

International Trade. Basis for International Trade The theory of absolute advantage - the advantage a nation has over other nations in the production.

Dolan, Microeconomics 4e, Ch. 15 Survey of Economics Edwin G. Dolan and Kevin C. Klein Best Value Textbooks 4 th edition Chapter 15 Global Trade and Trade.

Why Do People Trade? Unequal Distribution of Resources: Natural Resources: Ex. America fertile soil=economy based on agriculture; Southwest Asia= large.

Comparative and Absolute Advantage. Absolute Advantage The ability of a country, individual, company or region to produce a good or service at a lower.

INTERNATIONAL TRADE Why do nations trade?. What is international trade?  Exchange of capital goods and services across international borders.  Imports.

Tutorial Week 12.

Unit I: Basic Economic Concepts

Chapter 2: Comparative Advantage

Comparative advantage and specialization

Arthur can milk a goat in 10 minutes and shear a sheep in 4 minutes

CHAPTER 17 REVIEW Prize Wars Rules.

L2 classical trade theory

Absolute v. Comparative Advantage

Absolute & Comparative Advantage

Book Factory: Book = 8 pages + 1 title + page numbers + paper clip

Gains from Exchange Why do people willingly trade?

Absolute & Comparative Advantage

Economics Sample Unit 5 International Economics

Warm Up Why do nations trade?.

Absolute & Comparative Advantage

Mr. Mayer AP Macroeconomics

Comparative Advantage

Production Possibilities and Opportunity Costs

Arthur can milk a goat in 10 minutes and shear a sheep in 4 minutes

Comparative Advantage

International Vocabulary Review

Mr. Mayer AP Macroeconomics

Vocabulary!!! Woo Hoo!.

Review with Your Partners

Review with Your Partners

Absolute & Comparative Advantage

Absolute & Comparative Advantage

Comparative Advantage FRQ B #1; 2008 #3

Why Nations Trade Trade allows nations to specialize in some products and then trade them for goods and services that are more expensive to produce. Section.

Book Factory: Book = 8 pages + 1 title + page numbers + paper clip

Presentation transcript:

Absolute Advantage One person has an absolute advantage over another if he/she takes fewer hours to perform a task than the other person.

Comparative Advantage One person has a comparative advantage over another if his/her opportunity cost of performing a task is lower than the other person’s opportunity cost

Comparative Advantage: The Basis for Exchange (Example) Units of Pizzas per Day Units of Hamburgers per Day Jane 50 100 Sam 30 90

Comparative Advantage: The Basis for Exchange (Example) Jane has: Absolute advantage in the production of pizzas, but not hamburgers, and has a comparative advantage in the production of pizzas. Absolute advantage in the production of hamburgers, but not pizzas, and has a comparative advantage in the production of hamburgers. Absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of hamburgers. Absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of pizzas.