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US – What Are We Good At? America's Leading Exports (in billions of dollars) 1Civilian Aircraft74 2Semiconductors50.6 3Cars49.6 4 Pharmaceutical Preparations.

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Presentation on theme: "US – What Are We Good At? America's Leading Exports (in billions of dollars) 1Civilian Aircraft74 2Semiconductors50.6 3Cars49.6 4 Pharmaceutical Preparations."— Presentation transcript:

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2 US – What Are We Good At? America's Leading Exports (in billions of dollars) 1Civilian Aircraft74 2Semiconductors50.6 3Cars Pharmaceutical Preparations 40 5Car Accessories39.9

3 What Are Other Countries Good At?

4 Absolute Advantage – person or nation can produce more of a given product using a given amount of resources Comparative Advantage – the ability to produce a product with less opportunity cost Law of comparative advantage – a nation is better off when it produces goods and services for which it has a comparative advantage or Chapter 3 – Interdependence and the Gains from Trade

5 Output – final good or service, maximum amount that can be produced “How much is produced” Ex. China manufactured 2 million Iphones last year Input – resources "put in" to the economy that will help to produce an output; shows the number of resources required to produce a specific amount “How much is necessary to produce” Land, Labor, Capital (F.O.P.) Ex. It takes China 1 hour to produce 1 Iphone, it takes 6 workers, it takes 2 factories, etc. Output vs. Input

6 1.The United States manufactured 2000 airplane engines last year ___________________ 2.It takes the average worker 3 hours to produce a textile in China __________________ 3.Saudi Arabia can produce up to 11 million barrels of crude oil per day ________________ 4.It takes 1 machine to cultivate a farm (it used to take 10 people) __________________ 5.McDonalds requires 2 acres of property to build a restaurant ______________________ 6.McDonalds has the capability of producing 8500 burgers per minute ________________ 7.It takes 2 hours and four workers to unload a truck at Wal-Mart ____________________ 8.The United States produced 2000 tons of soybeans last year ____________________ Output vs. Input output input output input output input output

7 Two men live alone on an isolated island. To survive they must undertake a few basic economic activities like water carrying, fishing, cooking and shelter construction and maintenance. The first man is young, the second man is old. The younger man can gather 60 coconuts every hour, or catch 20 fish. While the older man can only gather 20 coconuts or catch 10 fish every hour. Activator Chapter 3 – Interdependence and the Gains from Trade

8 Productivity CoconutsFish Young Man6020 Old Man2010 Coconuts or Fish? Output Question

9 Productivity CoconutsFish Young Man6020 Old Man2010 Coconuts or Fish? Output Question Young Man has absolute advantage because he can produce both items more efficiently than the old man

10 Comparative Advantage CoconutsFish Young Man6020 Old Man2010 OGO – “Other Goes Over” method shows the opportunity cost of production Per Unit Opportunity Cost Total Cost/Total Production 10/20 = 1/2 F 60/20 = 3 C 20/60 = 1/3 F 20/10 = 2 C Output Method Young Man 1 Coconut = 1/3 Fish 1 Fish = 3 Coconut Old Man 1 Coconut = 1/2 Fish 1 Fish = 2 Coconut = = = =

11 Young Man has comparative advantage in collecting coconuts because he gives up less fish relative to his production of coconuts than the old man His opportunity cost for collecting coconuts is lower relative to the old man The old man has the comparative advantage in catching fish because he gives up less coconuts relative to his production of fish His opportunity cost for catching fish is lower Important Note: the only time two people/nations/firms will not trade is if there is no comparative advantage, opportunity cost is the same. Output Method Comparative Advantage CoconutsFish Young Man6020 Old Man /20 = 1/2 F 60/20 = 3 C 20/60 = 1/3 F 20/10 = 2 C

12 Productivity 1 Coconuts1 Fish Young Man1 hr.2 hrs. Old Man3 hrs.12 hrs. Young Man has absolute advantage because he can produce both items more efficiently than the old man Coconuts or Fish? Input Question

13 Absolute Advantage 1 Coconuts1 Fish Young Man1 hr.2 hrs. Old Man3 hrs.12 hrs. Young Man has absolute advantage because he can produce both items more efficiently than the old man Coconuts or Fish? Input Question

14 Comparative Advantage CoconutsFish Young Man1 hr.2 hrs. Old Man3 hrs.12 hrs. 1/22/1 = 2 3/12 = 1/4 12/3 = 4 IOU – “Input - Other Goes Under” method shows the opportunity cost of production Total Production/Total Cost Input Method

15 Determining Comparative Advantage Scenario: Canada and Mexico are considering the trade of two goods. Canada can produce 100 Furs or 100 trees. Mexico can produce 50 furs or 200 trees. Productivity Fur Trees Canada Mexico 100/ /50 100/100 50/200 = 1 T = 4 T = 1 F = 1/4 F It costs Canada ______ fur for every tree it produces. It costs Mexico ______ fur for every tree it produces. It costs Canada ______ tree for every fur it produces. It costs Mexico ______ tree for every fur it produces. 1 1/4 1 4 Therefore, Canada should specialize in the production of Fur, while Mexico should specialize in the production of trees

16 China has comparative advantage in car production US has a comparative advantage in Cheese production Determining Comparative Advantage Hours per Car/Cheese 1 Car1 Ton of Cheese US155 China42 15/5 = 3 CH5/15 = 1/3 CAR 4/2 = 2 CH2/4 = 1/2 CAR

17 Kate and Carl 1.It costs Kate ________ birdhouses to produce 1 t-shirt. 2.It costs Kate ________ shirts to produce 1 birdhouse. 3.It costs Carl ________ to produce 1 t-shirt. 4.It costs Carl ________to produce 1 birdhouse. 5.________ has a comparative advantage when producing t-shirts. 6.________ has a comparative advantage when producing birdhouses. 7.Therefore, ___________ should produce t-shirts and __________ should produce birdhouses. Productivity Per Hour Opportunity cost of a T-Shirts Opportunity cost of a Birdhouse Kate2/6 = _____ birdhouse 6/2 = ______ t-shirt Carl1/1 = _____ birdhouse 1/1 = ______ t-shirt 1/ / Kate Carl Kate Carl

18 Karateconomics

19 Absolute and Comparative Advantage Practice RiceBeans India2010 United Kingdom515 Which country enjoys an absolute advantage in beans? United Kingdom Which country enjoys an absolute advantage in rice? India

20 Absolute and Comparative Advantage Practice RiceBeans India2010 United Kingdom515 Which country enjoys an absolute advantage in beans? United Kingdom Which country enjoys an absolute advantage in rice? India

21 Absolute and Comparative Advantage Practice Productive Output RiceBeans India2010 United Kingdom515 Who has the higher opportunity cost when producing Rice? UK Who has the higher opportunity cost when producing Beans? India Who has comparative advantage when producing Beans? UK Who has comparative advantage when producing Rice? India Therefore, India should specialize in the production of, Rice while the U.K. should specialize in the production of Beans 10/20 = 1/2 Beans20/10 = 2 Rice 15/5 = 3 Beans5/15 = 1/3 Rice

22 Absolute and Comparative Advantage Practice Productive Output FishVegetables Country X1410 Country Y1415 Which of the following is true? a.Country Y has absolute advantage in producing both fish and vegetables, but comparative advantage in fish. b.With trade, country X will import fish. c.Country Y has comparative advantage in producing fish. d.These countries will not be able to benefit from specialization and trade. e.Country X will export fish to country Y. Answer: _____e________ 10/14 =.71 Vegs14/10 = 1.4 Fish 15/14 = 1.07 Vegs14/15 =.93 Fish

23 Absolute and Comparative Advantage Practice Productive Output GunsButter Russia6020 Cuba3010 Which country enjoys an absolute advantage? Russia

24 Absolute and Comparative Advantage Practice Productive Output GunsButter Russia6020 Cuba For every Gun that Russia produces, they give up _____1/3________ Butter. 10.For every Butter that Russia produces they give up ____3________ Guns. 11.For every Gun that Cuba produces they give up ______1/3_____ Butter. 12.For every Butter that Cuba produces they give up _____3_______ Guns. 13.Why is there no comparative advantage? Opportunity Cost is the same 14.Therefore, the two countries should not trade is when their opportunity cost is__________equal/the same____________________ 20/60 = 1/3 Butter60/20 = 3 Guns 10/30 = 1/3 Butter30/10 = 3 Guns

25 Absolute and Comparative Advantage Practice CarsBikes Italy42 Morocco51 Which country enjoys an absolute advantage in cars? Italy Which country enjoys an absolute advantage in bikes? Morocco

26 Absolute and Comparative Advantage Practice CarsBikes Italy42 Morocco51 Who has the higher opportunity cost when producing cars? Morocco Who has the higher opportunity cost when producing bikes? Italy Who has the comparative advantage when producing cars? Italy Who has the comparative advantage when producing bikes? Morocco Therefore, Italy should specialize in the production of cars while Morocco should specialize in the production of bikes 4/2 = 2 Bikes2/4 = 1/2 Cars 5/1 = 5 Bikes1/5 Cars

27 Daily Ten #1 - Shirts and Shoes Article Shirts Shoes Identify the country of origin for your shirts and shoes.

28 Should Tiger Woods Mow His Own Lawn? How can people benefit from specialization and trade?

29 Tiger can mow his lawn in only two hours, but he can also make $10,000 in two hours doing appearances. Tiger has a neighbor, Forrest. It will take Forrest 4 hours to mow Tiger’s lawn. Forrest could also spend those 4 hours working at McDonald’s for $20 total. Should Tiger mow his own lawn? Tiger Tiger Woods Y’all!

30 What is each person’s Opportunity Cost of mowing Tiger’s lawn? LawnWork Tiger1 hour$10,000 Forrest4 hours$20 Who mows lawns the best? Who makes more money working? How can Tiger benefit from Forrest?

31 Specialization

32 Terms of Trade Terms of trade – rate of exchange wherein both parties mutually benefit Gains from Trade – refers to the net benefits to agents from voluntary trading with each other; the specific amount that each party benefits through trade

33 Comparative Advantage CoconutsFish Young Man6020 Old Man /20 = 1/2 F 60/20 = 3 C 20/60 = 1/3 F 20/10 = 2 C or What Should be the Terms of Trade? 1 Fish for 2 ½ Coconuts More than 2 Coconuts Less than 3 Coconuts

34 Coconuts or Fish? Terms of Trade YM OM Terms of Trade 1 Fish for 2.5 Coconuts YM: 1 Fish costs 3 Coconut OM: 1 Fish costs 2 Coconut Fish Coconuts Comparative Advantage CoconutsFish Young Man6020 Old Man /20 = 1/2 F 60/20 = 3 C 20/60 = 1/3 F 20/10 = 2 C 2.5

35 Coconuts or Fish? Terms of Trade 1 1/3 1/22/3 1 YM OM Terms of Trade 1 Coconut for.44 Fish YM: 1 Coconut costs 1/3 Fish OM: 1 Coconut costs 1/2 Fish Coconuts Fish Comparative Advantage CoconutsFish Young Man6020 Old Man /20 = 1/2 F 60/20 = 3 C 20/60 = 1/3 F 20/10 = 2 C.44

36 Gains From Trade ExampleGains From Trade Example Slavia and Lebos are considering the trade of two goods, clothing and food. Slavia can produce 10 food or 10 clothing. Lebos can produce 3 Food or 9 Clothing. Productivity FoodClothing Slavia Lebos 10/10 = 1 C 9/3 = 3 C 10/10 = 1 F 3/9 = 1/3 F First, Input the data to determine who has a comparative advantage in production. Indicate Per Unit Opportunity Cost: Slavia 1 F costs _______ C 1C costs _______F Lebos 1 F cost _______ C 1C costs _______F Who has the comparative advantage in the production of food? _________________________________ Who has the comparative advantage in the production of clothing? _________________________________ Slavia Lebos Term of Trade If Slavia wants to experience gains from trade then they must agree to trade 1 food for _________ clothing. If Lebos wants to experience gains from trade then they must agree to trade ________ clothing for 1 food. 3 1/3 +1 > Food Clothing Slavia Lebos

37 Finding the Gains From Trade 1.First, graph original production possibilities 2.Then, graph the new points based on gains trade. Slavia and Lebos agree to trade at a rate of 1 food for 2 clothing (1F = 2C). Slavia produces all food (10) and trades 1 food for 2 clothing. Therefore ending up with 9 food and 2 clothing. Lebos produces all clothing (9) and trades 2 clothing to Slavia for 1 food. Therefore, Lebos ends up with 7 clothing and 1 food. Food 0 Clothing Slavia Gains from trade +1/3 Food Lebos Food Clothing Gains from trade +1 Clothing Production Possibilities Before Trade Production Possibilities After Trade

38 Application Question Comparative Advantage Two people are academics who are paid for how many papers they produce. In one year Jane can write 4 economics papers or 6 law papers. John can write 3 economics papers or 1 law paper. They need to figure out who should be the lawyer and who should be the economist. Create two graphs that summarize all the possible choices that they can produce. Then determine opportunity cost in the chart below 6 Economics Papers Productivity Per Year Economics PapersLaw Papers Jane46 John31 Law Papers 6/4 = 1.5 LP 1/3 =.33 LP 4/6 = 2/3 EP 3/1 = 3 EP JaneJohn

39 Application Question Comparative Advantage They end up producing a total of 9 papers, 6 law papers and 3 economics papers. They decide to trade one law paper for one of economics papers; Jane ends up with 5 law papers and 1 economics paper while John can have 1 law paper and 2 economics papers Plot the new points on the respective PPFs. 5 6 Economics Papers Law Papers JaneJohn *Notice that they have broken through the constraints imposed by the scarcity of time. Both of these points lie outside the respective PPFs. John could not have written 1 law paper and 2 economics papers in a year because it takes him a year just to write the law paper. Jane could never have written 5 law papers and 1 economics papers in one year: it would have taken her 13 months to do so.*

40 Sample Free Response Question 1. The diagram above shows the production possibilities curves for two countries: Artland and Rayland. Using equal amounts of resources, Artland can produce 600 hats or 300 bicycles, whereas Rayland can produce 1,200 hats or 300 bicycles. Calculate the opportunity cost of a bicycle in Artland. If the two countries specialize and trade, which country will import bicycles? Explain. If the terms of trade are 5 hats for 1 bicycle, would trade be advantageous for each of the following? 1.Artland 2.Rayland If productivity in Artland triples, which country has the comparative advantage in the production of hats? 6 points ( ) (a) 1 point: 1.One point is earned for stating that the opportunity cost of a bicycle in Artland is 600/300 = 2 hats. 2.(b) 2 points: One point is earned for stating that Rayland will import bicycles. One point is earned for any one or more of the following explanations: Rayland has a comparative advantage in hats. Rayland has a comparative disadvantage in bicycles. Rayland has a lower opportunity cost in hats or higher opportunity cost in bicycles. Artland has a comparative advantage in bicycles. Artland has a comparative disadvantage in hats. Artland has a lower opportunity cost in bicycles or a higher opportunity cost in hats. 3.(c) 2 points: One point is earned for stating that it is advantageous for Artland. One point is earned for stating that it is NOT advantageous for Rayland. 4.(d) 1 point: One point is earned for stating that Rayland has a comparative advantage in producing hats.

41 Extra Credit Chapter 3 1.What is the difference between absolute and comparative advantage? 2.Give an example of how in the “real-world” everyone benefits from trade 3.Explain your interpretation of the political cartoon: 1. Illustrator’s message 2. Clues (people, symbols etc.) 3. Do you agree or disagree?

42 Review Question Comparative Advantage Two people are academics who are paid for how many papers they produce. In one year Jane can write 4 economics papers or 6 law papers. John can write 3 economics papers or 1 law paper. They need to figure out who should be the lawyer and who should be the economist. Create two graphs that summarize all the possible choices that they can produce. Then determine opportunity cost in the chart below Economics Papers 00 Productivity Per Year Economics PapersLaw Papers Jane John Law Papers JaneJohn

43 Two athletes Joe and Jim play on the same team football team. Joe is bigger, faster, and stronger than Jim. The coaches are trying to determine what positions to play Joe and Jim for the upcoming season. When Joe plays quarterback, he throws 20 td’s per season. When he plays receiver he scores 12. When Jim plays quarterback he throws 14 td’s. When he plays receiver he scores 5 td’s. Who should play what? Plug in the information to the table below. Absolute and Comparative Advantage and Sports QBWR Joe2012 Jim145 QBWR Joe12/20 = ____20/12 = ____ Jim5/14 = _____14/5 = _____

44 Two athletes Joe and Jim play on the same team football team. Joe is bigger, faster, and stronger than Jim. The coaches are trying to determine what positions to play Joe and Jim for the upcoming season. When Joe plays quarterback, he throws 20 td’s per season. When he plays receiver he scores 12. When Jim plays quarterback he throws 14 td’s. When he plays receiver he scores 5 td’s. Who should play what? Plug in the information to the table below. Absolute and Comparative Advantage and Sports QBWR Joe2012 Jim145 QBWR Joe12/20 = ____20/12 = ____ Jim5/14 = _____14/5 = _____ QBWR Joe 12/20 = 3/5 or 60% 20/12 = 5/3 or 1.6% Jim5/14 = 35%14/5 = 2.8%

45 Two athletes Joe and Jim play on the same team football team. Joe is bigger, faster, and stronger than Jim. The coaches are trying to determine what positions to play Joe and Jim for the upcoming season. When Joe plays quarterback, he throws 20 td’s per season. When he plays receiver he scores 12. When Jim plays quarterback he throws 14 td’s. When he plays receiver he scores 5 td’s. Who should play what? Plug in the information to the table below. Absolute and Comparative Advantage and Sports QBWR Joe2012 Jim145 QBWR Joe12/20 = ____20/10 = ____ Jim5/14 = _____14/5 = _____ QBWR Joe 12/20 = 3/5 or 60% 20/12 = 5/3 or 1.6% Jim5/14 = 35%14/5 = 2.8%

46 Trade Barriers and Agreements Trade Barrier – a trade restriction, used to prevent a foreign product from freely entering a nation’s territory Import Quotas – a limit on the amount of a good that can be imported Voluntary Export Restraint – a self-imposed limitiation on the a number of products shipped to a particular country Tariffs – a tax on imported goods

47 International Cooperation and Agreements International Free Trade Agreement – results from cooperation between countries to reduce trade barriers and tariffs to promote trade North American Free Trade Agreement (NAFTA) – agreement between Canada, Mexico and the U.S. to eliminate tariffs and other trade barriers European Union (EU) – a regional trade organization of European nations World Trade Organization (WTO) – a worldwide organization whose goal is to promote free global trade

48 Measuring Trade Exchange Rate – the value of one foreign nation’s currency in relation to another nation’s currency Determining the Rate of Exchange 1 Dollar = 12 Mexican Pesos Hotel room costs 500 Pesos per night 500/12 = $41.66

49 Due Monday Comparative Advantage Article (Lance Armstrong, Martha Stewart) 2.Absolute and Comparative Practice 3.Homework - The Legacy of Adam Smith and David Ricardo, pg Homework - YouTube Video #34: Compartive Advantage and Trade 5.Homework - Should Tiger Woods Mow His Own Lawn, pg Homework - The Changing Face of International Trade, pg Chapter 3 Practice Review 8.Free Response Questions 9.Daily Tens (3) 10.Notes Chapter 3 11.Terms Chapter 3

50 Specialization and Trade Carl SpecializationTradeNet Effect Carl Specializes, switching 2 hours from t- shirt production to birdhouse production Carl trades 1 birdhouse for 2 t-shirts Net effect is same number of t-shirts and 1 more birdhouse Kate SpecializationTradeNet Effect Kate specializes, switching one half-hour from birdhouse production to t-shirt produciton Kate trades 2 t- shirts for 1 birdhouse Net effect is the same number of birdhouse s and 1 more t- shirt

51 1. a. Angela’s PPF

52 b. 2 mugs. 20 mugs. c.1/2 pot. 5 pots d.Because Angela’s productivity in pot and mug production is constant – it doesn’t depend on how many mugs or pots she is making. Therefore the opportunity cost of mugs in terms of pots is constant (and, of course, so is the opportunity cost of pots in terms of mugs).

53

54 c. 1/3 ton of grain. 3 computers. d.1 ton of grain. 1 computer. e.Germany because one worker can produce 15 computers compared to 4. Germany because one worker can produce 5 tons of grain compared to 4.

55 f.Germany because a computer has the opportunity cost of only 1/3 ton of grain compared to 1 ton of grain in Poland. Poland because a ton of grain has the opportunity cost of only 1 computer compared to 3 computers in Germany. g.Germany should produce computers while Poland should produce grain because the opportunity cost of computers is lower in Germany and the opportunity cost of grain is lower in Poland. That is, each has a comparative advantage in those goods. h.Grain must cost less than 3 computers per ton to Germany. Computers must cost less than 1 ton of grain per computer to Poland.

56 b. United States c. Neither, the opportunity cost is the same d. No. Each can get the same trade-off between goods domestically.

57 Application Questions – pgs. 58 – 59 Should Tiger Woods Mow His Own Lawn? 1.What does Tiger Woods hold an absolute advantage in? 2.What does Forrest Gump have a comparative advantage in? 3.What is the opportunity cost for both Tiger and Forrest for mowing the lawn? 4.Why are the gains from trade beneficial in this scenario? Should The United States Trade With Other Countries? 1.Create a chart to show the production of cars and food in the U.S. and Japan. 2.What is the opportunity cost for both countries production of cars and food? 3.Who has a comparative advantage in the production of each?

58 Application Questions – pgs. 58 – 59 Should Tiger Woods Mow His Own Lawn? 1.What does Tiger Woods hold an absolute advantage in? 2.What does Forrest Gump have a comparative advantage in? 3.What is the opportunity cost for both Tiger and Forrest for mowing the lawn? 4.Why are the gains from trade beneficial in this scenario? Should The United States Trade With Other Countries? 1.Define imports and exports. 2.Create a chart to show the production of cars and food in the U.S. and Japan. 3.What is the opportunity cost for both countries production of cars and food? 4.Who has a comparative advantage in the production of each? Answer the question to the “Quick Quiz” Productivity Per Month FoodCars U.S. Japan 2 1/2 = ½1 2/1 = 2 1 1/1 = 1

59 Application Questions – pgs. 58 – 59 Should Tiger Woods Mow His Own Lawn? 1.What does Tiger Woods hold an absolute advantage in? 2.What does Forrest Gump have a comparative advantage in? 3.What is the opportunity cost for both Tiger and Forrest for mowing the lawn? 4.Why are the gains from trade beneficial in this scenario? Should The United States Trade With Other Countries? 1.Define imports and exports. 2.Create a chart to show the production of cars and food in the U.S. and Japan. 3.What is the opportunity cost for both countries production of cars and food? 4.Who has a comparative advantage in the production of each? Productivity Per Month FoodCars U.S. Japan 2 1/2 = ½1 2/1 = 2 1 1/1 = 1

60 Application Question Comparative Advantage A Japanese worker can produce 6 units of steel or 3 televisions. A South Korean worker can produce 8 units of steel or 2 televisions. Output SteelTelevisions Japan63 S. Korea82 TVs 3/6 = 1/2 TV 2/8 = 1/4 TV 6/3 = 2 STL 8/2 = 4 STL Terms of Trade 1TV = 3 Steel 1 Steel = 1/3 TV Steel Japan 1 Steel = 1/2 TV 1 TV = 2 Steel S. Korea 1 Steel = 1/4 TV 1 TV = 4 Steel Japan S. Korea 1

61 Productivity Per Hour SteelTelevisions Japan SKorea Productivity SteelTelevisions Japan63 S. Korea82 Steel 00 Televisions JapanSouth Korea *Important Point: The production possibilities frontier is linear in these cases because the labor resource can be moved from the production of one good to the other at a constant rate.* 3/6 = 1/2 TV 2/8 = 1/4 TV 6/3 = 2 STL 8/2 = 4 STL Gains from trade +1/2 TV Gains from trade +1/4 Steel Suppose that Japan and South Korea settle on a trading price of 1 television for 3 units of steel (or 1/3 of a television for 1 unit of steel). 1.Japan produces 3 TVs, exporting 1 for 3 units of steel. 2.South Korea produces 8 units of steel, and exports 3 units for 1 television, this allows them to consume 5 units of steel and 1 television.

62 1. Anna and Barry can grow the following amounts of potatoes and cabbage with the same amount of labor. Type of problem: (output / input) Anna – 1 Potatoe = ______ CabbageAnna – 1 Cabbage = ______ Potatoe Barry – 1 Potatoe = ______ CabbageBarry – 1 Cabbage = _______ Potatoe 2. Number caught per day. Type of problem: (output / input Henry – 1 Deer = ______ AntelopeHenry – 1 Antelope = ______ Deer John – 1 Deer = ______ AntelopeJohn – 1 Antelope = ______ Deer 21/ /3.52

63 3. Days to produce one unit of each. Type of problem: (output / input) XYZ Corp – 1 Car = ______ PlaneXYZ Corp – 1 Plane = ______ Cars QKFX – 1 Car = ______ PlaneQKFX – 1 Plane = ______ Cars 4. Acres to produce 100 bushels. Type of problem: (output / input) India – 1 Corn = ______ RiceIndia – 1 Rice = ______ Corn China – 1 Corn = ______ RiceChina – 1 Rice = ______ Corn

64 5. To produce the following from one ton of olives. Type of problem: (output / input) Zaire – 1 Olive = ______ BottlesZaire – 1 Bottle = ______ Olives Colombia –1 Olive = ______ Bottles Colombia – 1 Bottle = ______ Olives

65 Extra Credit “Tiger Woods should not mow his own lawn.” Use the concepts of specialization and comparative advantage to argue for this statement. Draw a personal PPF model. Draw a personal circular flow model and a detailed explanation for each part of the model.

66 Due Today – Binder Check Chapter Chapter 2 +3 Notes 2.PPF Activity Reflection Questions and Graph 3.Absolute and Comparative Practice 4.Free Response Questions 5.Daily Tens 6.PPF Exercise Worksheet


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