03 comp advantage graphs and applications
TRANSCRIPT
Trade openerWhat is good about living along the US/Mexico border?
Where was your shirt made? (Have your neighbor check)
http://www.flashworldmap.com/
Today: Mankiw Chapter 3
On the production possibilities frontier shown, which point or points are NOT possible for this economy to produce?
a.A, B, C, Db.E and Fc.E onlyd.F only
On the production possibilities frontier shown, which point or points are efficient?
a.A, B, C, Db.B and Cc.E and Fd.F only
Specialization of labor• Firms & countries
figure out more efficient methods of production
• Effect on concept of trade?
Honduras
• 100 tons of sugar/year
OR• 100 tons of
bananas
• PPF
Cuba & Honduras• Scarcity of farm land• Who has absolute
advantage?• Who has the
comparative advantage of trade?
• Transaction cost• Why is this better? Cuba:
600 tons of sugar/yearOR200 tons of bananas
Honduras:
100 tons of sugar/yearOR100 tons of bananas
Developed vs. Emerging markets
Make a shirt in the USA:LandLaborCapital
Make a shirt in Honduras:LandLaborCapital
Developed vs. Emerging markets
Design smartphone in the USA:LandLaborCapital
Design smartphone in Honduras:LandLaborCapital
Comparative Advantage AssignmentDue
• Your Choice:
• AP Econ Workbook Assignment
• Write 2-3 paragraph to John McCain explaining the concepts of absolute advantage, comparative advantage and the benefits of approving the TransPacific Partnership, a massive free trade deal between the US/Canada and many Asian countries
• 5pts extra if I watch you e-send it