1. Opportunity Cost Review
Take 2 minutes: What does “there is no such thing as a free lunch mean” to you?

2. Opportunity Cost Review
Opportunity Cost: the next best alternative
Trade-off: Any alternative that must be given up

3. NMHS Menu Nachos Peanut Butter and Jelly Sandwich Chicken Fingers
Caesar salad
Ham and cheese sandwich
Rank your choice from 1-5
What was your opportunity cost?
What was your trade-off?

4. Opportunity Cost Review
What does there is no such thing as a free lunch mean to….
Georgia?
Other Competing States?

5. Notes –Comparative v. Absolute
SSEIN1a- Define and compare absolute and comparative advantage
SSEIN1b-Explain that most trade takes place b/c of comparative advantage
SSEIN1c- Explain the difference between balance of trade and balance of payments

6. What is trade?
Trade is the voluntary exchange of goods and services.

7. Voluntary Exchange
People only exchange goods and services when it benefits them OR marginal benefits outweigh marginal costs
When costs are greater than the benefits people stop trading
Both parties gain!

8. Why trade?
People and organizations in different countries often trade goods and services because they value the things they buy more than they sell

9. Exports and Imports
Export: Goods that a nation sells to other countries
Import: goods that a nation buys from other nations

10. Types of advantages
Comparative Advantage
Absolute advantage
Producing a good because you have a lower opportunity cost.
You can produce a good with fewer resources than another country.
This means you can produce more goods and services more efficiently than another country.

11. Comparative Advantage
Comparative advantage allows countries to specialize.

12. Benefits Benefits of Trade 1. Increase in competition
2. Increases the variety of goods and services
3. Spreads knowledge and education
4. Spreads new technologies and production methods

13. Balance of Trade
It is the difference between the monetary value of exports and imports in the country
Exports - Imports= Balance of Trade
FAVORABLE BALANCE
UNFAVORABLE BALANCE

14. Balance of Payments
Trade Deficit: occurs when a country pays more for imports that it makes on exports
Trade Surplus: occurs when a country earn more on exports than it pays for imports