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.
Slide 4
Slide 5
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. Im 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
Slide 6
WHEAT FARMERS ON 100 ACRES OF LAND 5000 BUSHELS PRODUCED4000
BUSHELS PRODUCED ABSOLUTE ADVANTAGE
Slide 7
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]
Slide 8
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.
Slide 9
Should Wisconsin grow oranges?Should Wisconsin grow oranges?
Should Florida make cheese?Should Florida make cheese? No & No!
[We dont want the Florida cheeseheads ]No & No! [We dont 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.
Slide 10
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 dont grow well in WI. How much orange production
does WI give up to produce one more unit of cheese? Very little,
because oranges dont 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!
Slide 11
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