1. Review with Your Partners
What are goods and services?
What are productive resources?
Describe opportunity costs.
What is the difference between trade-offs and opportunity costs?
What is scarcity?
What is the PPC? What does it show?
What is the fundamental economic problem?
Name 10 Lawndale teachers.

2. Think about it!
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?

3. Comparative Advantage: Comparative Advantage
The ability to produce something at a lower opportunity cost than other producers.
Law of
Comparative Advantage
The individual with the lowest opportunity cost for producing a particular good should specialize in the production of that good.

4. 1. Example: Should Mrs. X Grade Her Own Papers?
2. Who should specialize in what?
Mrs. X can grade 50 tests in one hour, but she can also spend that time tutoring a student for $100/hour. Her TA can grade 25 tests in one hour or use that time scooping ice cream for $8/hr.
3. Opportunity Cost for teacher to grade papers?
4. Opportunity Cost for student to grade papers?
1. no
TA=grade papers
2. Mrs. X = tutor
3. 100$
4. 8$

5. Absolute Advantage
A country or a business that can produce more products using less resources.

6. 1. Who has the comparative advantage in T. V’s. 2
1. Who has the comparative advantage in T.V’s? 2. Who has the absolute advantage in T.V’s?
T.V’s
DVD’s
USA
200
175
China
150
125
USA
CHINA