PPT-Absolute Advantage Comparative Advantage

EQ How do we gain from trade What was the most important document written in 1776 written by Adam Smith The Father of Economics The Wealth of Nations He is my great great great great . A2 Economics. Aims and Objectives. Aim: . Understand the theory of absolute and comparative advantage.. Objectives: . • Define the theory of absolute . and comparative . advantage. .. Analyse the effects of specialisation. International Trade:. Comparative Advantage and Trade Barriers. Disclaimer: The views expressed are those of the presenters and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System.. Terms of Trade. Graph the Following PPCs. Shirts. (millions). Wheat. (millions. of bushels). China. 25. 50. USA. 50. 200. Values represent all resources spent on one good. (the other value is 0). Which country has an absolute advantage in shirts?. OBJECTIVE: SWBAT analyze the benefits of trade.. DO NOW: Why do you think it is important for industrialized countries like the United States of America to trade?. Consider your typical day:. You wake up to an alarm clock made in Korea.. Corn. Wheat. 5. 6. 6. 9. Because the PPF gradients are different, these two countries have different opportunity costs between Corn and Wheat . they will trade!. **Opportunity cost = sacrifice/gain. Absolute Advantage. Absolute advantage is when someone is the best at doing something. America is the best at producing entertainment. Colt . Brennann. (Hawaii) is the best at throwing touchdown passes. Imagine that you are the manager of a fast-food restaurant. You are outgoing, interact well with customers, and work the cash register proficiently. You are also efficient in the kitchen and can manage several tasks at once, such as making pizzas, preparing salads, and filling drinks. . Unit 1. AP Micro. Stater. It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.. Adam Smith, . The Wealth of Nations. (1776). Absolute and Comparative Advantage AP Macroeconomics Coach Saucedo Manvel High School They want goods Think of what we would do without if we didn’t trade. To make money. Nations trade for several reasons How do we determine what to produce?. Absolute Advantage. Absolute advantage is when someone is the best at doing something. The USA is the best at producing entertainment. Nick . Saban. is the best at coaching college football. Absolute Advantage. given . the exact same resources, country A can produce more of a good than country . B. Comparative Advantage. given the same resources, country B produces good X at a lower opportunity cost.   . . Lecture 3: Comparative Advantage Benjamin Graham. Today’s Plan. Housekeeping. Reading Quiz. How trade creates wealth. An Inquiry in the Nature and Causes of the Wealth of Nations (. 1776). “It is a maxim of every prudent mast of a family, never to attempt to make at home what will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes but employs a tailor.”. family, never to attempt to make at home . what will cost him more to make than to . buy. The tailor does not attempt to make . his own shoes, but buys them of the . shoemaker. The shoemaker does not .