alarm clock MADE IN JAPANcoffeepotMADE IN CHINAelectric razor MADE IN HONG KONGdress shirt(MADE IN SRI LANKA)designer jeans (MADE IN SINGAPORE) tennis shoesMADE IN KOREA electric skilletMADE IN INDIA calculator (MADE IN MEXICO) watch (MADE IN TAIWAN )radio(MADE IN INDIA)car (MADE IN GERMANY)GAS Saudi Arabia AMERICAN JOB. computer (MADE IN MALAYASIA), sandals (MADE IN BRAZIL)wine (MADE IN FRANCE)TV (MADE IN INDONESIA) Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA). After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN ) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) filled it with GAS from Saudi Arabia and continued his search for a good paying AMERICAN JOB. At the end of yet another discouraging and fruitless day checking his computer (MADE IN MALAYASIA), Joe decide to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can't find a good paying job in America..... Actually this is a good thing. We get more choices, lower prices, & because more is bought, more jobs are created.

I Can do 8 push-ups. I Can do 42 push-ups, but 102 if you play the Aggie Fight Song. I have an absolute advantage, I can do 42 push-ups. I can clean that house in 4 hours. I’m more efficient. I can do the same work in 3 hours so I have an absolute advantage. FSU Seminole UF Gator F uture Owl Maid F uture Golden Knight Maid

WHEAT FARMERS ON 100 ACRES OF LAND 5000 BUSHELS PRODUCED4000 BUSHELS PRODUCED ABSOLUTE ADVANTAGE

but, a lot of people gain a little. With trade, a few people lose a lot, Free trade is like improved technology [There are some job losses, but many more job gains] [Their jobs] [Lower prices & more choices]

CountryComparative a dvantage d ue to natural resources & climate United StatesWheat, corn, and cereals CanadaTimber Saudi ArabiaOil FranceWine BrazilCoffee IsraelOranges and grapefruit MexicoTomatoes Comparative advantage largely due to physical capital, Countryhuman capital, and scientific knowledge United States Aircraft, computers, industrial chemicals, plastics, & chemicals JapanAutomobiles, steel, electronics GermanyMachine tools, scientific instruments, luxury automobiles U nited K ingdom Financial services TaiwanTextiles SwitzerlandWatches South KoreaShips Comparative advantage and differences in opportunity costs are the basis for specialized production and trade.

Should Wisconsin grow oranges?Should Wisconsin grow oranges? Should Florida make cheese?Should Florida make cheese? No & No! [We don’t want the Florida cheeseheads ]No & No! [We don’t want the Florida cheeseheads ] –Wisconsin should specialize in cheese –Florida should specialize in orange production –Then trade cheese for oranges –More cheese and oranges for everyone! Disadvantages:Disadvantages: –Job losses among dairy farmers in Florida –Job losses among orange growers in Wisconsin Advantage:Advantage: - Job gains among dairy farmers in WI and job gains among orange growers in FL more than make up for the other job losses. - Trade is beneficial for both states as a whole … … though not for all residents.

Econ Lingo: Opportunity cost WisconsinFlorida Cheese production Low opportunity cost High opportunity cost Orange production High opportunity cost Low opportunity cost How much orange production does WI give up to produce one more unit of cheese? Very little, because oranges don’t grow well in WI. How much orange production does WI give up to produce one more unit of cheese? Very little, because oranges don’t grow well in WI. How much cheese production does WI give up to produce one more unit of oranges? A lot! How much cheese production does WI give up to produce one more unit of oranges? A lot!

More Econ Lingo: Comparative advantage More Econ Lingo: Comparative advantageWisconsinFlorida Cheese production Low opportunity cost High opportunity cost Orange production High opportunity cost Low opportunity cost The country with the lower opportunity cost in producing one good has a comparative advantage in that good. The country with the lower opportunity cost in producing one good has a comparative advantage in that good. specialize in cheeseWisconsin has a comparative advantage in cheese production => specialize in cheese specialize in orangesFlorida in orange production => specialize in oranges Comparative advantage