Absolute and Comparative Advantage and TRADE Absolute advantage
![Absolute and Comparative Advantage, and TRADE Absolute and Comparative Advantage, and TRADE](https://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-1.jpg)
Absolute and Comparative Advantage, and TRADE
![Absolute advantage • One nation can produce more output with the same resources as Absolute advantage • One nation can produce more output with the same resources as](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-2.jpg)
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 Comparative advantage • One nation can produce a good at a lower opportunity cost](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-3.jpg)
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 Examples of comparative advantage • Lawyer and secretary • Doctor and nurse](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-4.jpg)
Examples of comparative advantage • Lawyer and secretary • Doctor and nurse
![INPUT METHOD • A COMPARISON OF THE OPPORTUNITY COST OF THE RESOURCES EMPLOYED TO INPUT METHOD • A COMPARISON OF THE OPPORTUNITY COST OF THE RESOURCES EMPLOYED TO](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-5.jpg)
INPUT METHOD • A COMPARISON OF THE OPPORTUNITY COST OF THE RESOURCES EMPLOYED TO PRODUCE THE SAME OUTPUT OF DIFFERENT GOODS OR SERVICES
![INPUT: UNDER TY Jessica Mow a lawn 60 minutes Trim a lawn 40 minutes INPUT: UNDER TY Jessica Mow a lawn 60 minutes Trim a lawn 40 minutes](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-6.jpg)
INPUT: UNDER TY Jessica Mow a lawn 60 minutes Trim a lawn 40 minutes 75 minutes 90 minutes
![The opportunity cost of producing the other good Is Always The Reciprocal The opportunity cost of producing the other good Is Always The Reciprocal](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-7.jpg)
The opportunity cost of producing the other good Is Always The Reciprocal
![Save Time: It’s Always The Reciprocal! • If Ty’s cost to mow a lawn Save Time: It’s Always The Reciprocal! • If Ty’s cost to mow a lawn](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-8.jpg)
Save Time: It’s Always The Reciprocal! • If Ty’s cost to mow a lawn is 3/2’s trimmed lawns; then Ty’s cost to trim a lawn is 2/3’s mowed lawns • If Jessica’s cost to mow a lawn is 5/6’s trimmed lawns; then Jessica’s cost to trim a lawn is 6/5’s mowed lawns
![OUTPUT METHOD • A COMPARISON OF THE OPPORTUNITY COST OF THE PRODUCTIVITY (OR OUTPUT) OUTPUT METHOD • A COMPARISON OF THE OPPORTUNITY COST OF THE PRODUCTIVITY (OR OUTPUT)](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-9.jpg)
OUTPUT METHOD • A COMPARISON OF THE OPPORTUNITY COST OF THE PRODUCTIVITY (OR OUTPUT) OF DIFFERENT GOODS OR SERVICES, USING THE SAME RESOURCES • ie: output per hour, or per acre
![Adjust the paradigm Adjust the paradigm](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-10.jpg)
Adjust the paradigm
![OUTPUT: OVER Radios Speakers Mark 6 2 Doreen 10 5 OUTPUT: OVER Radios Speakers Mark 6 2 Doreen 10 5](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-11.jpg)
OUTPUT: OVER Radios Speakers Mark 6 2 Doreen 10 5
![Determining comparative advantage (output method) (over) CDs Pounds of beef Japan 4 2 Canada Determining comparative advantage (output method) (over) CDs Pounds of beef Japan 4 2 Canada](http://slidetodoc.com/presentation_image/4c96bde4e450459e6d9ecefe8cdeffc5/image-12.jpg)
Determining comparative advantage (output method) (over) CDs Pounds of beef Japan 4 2 Canada 4 6 1. Which nation has a absolute an advantage in producing CD’s? 2. Which nation has a absolute an advantage in producing beef? 3. Which nation has a comparative advantage in producing CD’s? 4. Which nation has a comparative advantage in producing beef? 5. Should Japan specialize in CD’s or beef? 6. Should Canada specialize in CD’s or beef?
- Slides: 12