1. Comparative Advantage
2.3

2. Comparative Advantage Absolute Advantage
The group with the lowest opportunity cost of producing an output should specialize in that output
Indicates who should do what
Absolute Advantage
Being able to make something using fewer resources than other producers require
Being able to do both better

3. Who has the ABSOLUTE ADVANTAGE?
Who has the COMPARATIVE ADVANTAGE?

4. p. 51 You David Wash a car x2 Mow the lawn 3 hrs.
90 min.
2 hrs.
1hr.
3 hrs.
Compare both of your opportunity costs for the chores
Always start with the one withOUT the absolute advantage

5. Specialization Focusing on a single task enabling greater productivity
Leads to division of labor
Takes advantage of preferences AND natural abilities
Allows workers to gain expertise
Bad side?
Repetitious routine