1. Unit 1 : MicroeconomicsVisual 1.4 National Council on Economic Educationhttp://apeconomics.ncee.net Absolute Advantage and Comparative Advantage ABSOLUTE ADVANTAGE One nation can produce more output with the same resources as the other. COMPARATIVE ADVANTAGE One nation can produce a good at a lower opportunity cost than the other. EXAMPLES OF COMPARATIVE ADVANTAGE Lawyer and secretary Doctor and nurse

2. Unit 1 : MicroeconomicsVisual 1.3 National Council on Economic Educationhttp://apeconomics.ncee.net The Circular Flow of Resources, Goods, Services and Money Payments

3. Unit 1 : MicroeconomicsVisual 1.2 National Council on Economic Educationhttp://apeconomics.ncee.net Possibilities Curve Production

4. Unit 1 : MicroeconomicsVisual 1.1 National Council on Economic Educationhttp://apeconomics.ncee.net The Economic Way of Thinking Everything has a cost. People choose for good reasons. Incentives matter. People create economic systems to influence choices and incentives. People gain from voluntary trade. Economic thinking is marginal thinking. The value of a good or service is affected by people’s choices. Economic actions create secondary effects. The test of a theory is its ability to predict correctly.

5. Unit 1 : MicroeconomicsVisual 1.5 National Council on Economic Educationhttp://apeconomics.ncee.net Determining Comparative Advantage (Output Method) 1. Which nation has an absolute advantage in producing CDs? 2. Which nation has an absolute advantage in producing beef? 3. Which nation has a comparative advantage in producing CDs? 4. Which nation has a comparative advantage in producing beef? 5. Should Japan specialize in CDs or beef? 6. Should Canada specialize in CDs or beef?

6. Unit 1 : MicroeconomicsVisual 2.1 National Council on Economic Educationhttp://apeconomics.ncee.net Changes in Demand and Quantity Demanded