Comparative vs. Absolute Advantage
Transcript of Comparative vs. Absolute Advantage
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Buy American
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Where was I made?
United States
Honduras
Thailand
Haiti
China
Bangladesh
Taiwan
Brazil
Buy American
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Why should people in the United States buy American made products?
At least three sentences.
Why Buy?
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Guess Where
Revealed…
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Debrief
1. Why do so many of you purchase foreign made goods? What was
your incentive for buying from foreign producers?
2. If you are using American-made products, what was your incentive for
purchasing them?
3. Did your purchase of foreign- made goods make our country better or worse off?
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So Many Goods-So Many Places
Absolute and Comparative Advantage
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Lets meet……..
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Absolute Advantage
Barbie Ken
Cooking
Cleaning
Time
10 Min. 40 Min.
20 Min. 30 Min.
Who takes the least amount of time to do
their work ?
30 Min. 70 Min.
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Barbie has an absolute advantage in cooking and cleaning.
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Remember opportunity cost?
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4/3 or 1&1/3 Cleaning
Cooking
Cleaning 2 Meals
Comparative AdvantageBarbie Ken
Cooking 10 min. 40 min.
Cleaning 20 min. 30 min. Opportunity Cost of Doing a Job
½ Cleaning
¾ Meal
When Barbie decides to clean, how many meals is she giving
up?
When Ken cooks, what dose he give
up?Barbie has the comparative advantage in cooking.
Ken has the comparative advantage in cleaning.
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Comparative AdvantageBarbie Ken
Cooking 10 min. 40 min.
Cleaning 20 min. 30 min. 30 min. 70 min.
AFTER SPECIALIZING IN ONE JOB!
Ken = cleans (2) rooms in 60 min. and saves 10min.
Barbie = cooks (2) meal in 20 min. and saves 10 min.
*Specialization allows Barbie and Ken more time to engage in more productive behavior! (and fight less)
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