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TRADE IN A GLOBAL ECONOMY

TRADE IN A GLOBAL ECONOMY. INTERNATIONAL TRADE. ABSOLUTE ADVANTAGE: http://education-portal.com/academy/lesson/absolute-advantage-in-trade-definition-and-examples.html. Absolute vs. Comparative Advantage in Trade. Sample Question:.

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TRADE IN A GLOBAL ECONOMY

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  1. TRADE IN A GLOBAL ECONOMY

  2. INTERNATIONAL TRADE

  3. ABSOLUTE ADVANTAGE: http://education-portal.com/academy/lesson/absolute-advantage-in-trade-definition-and-examples.html

  4. Absolute vs. Comparative Advantage in Trade

  5. Sample Question: • How many loads of laundry can Tony do in a week? ________ How many loads of laundry can Jen do in a week? ______ • How many lawns can Tony mow in a week? ________ How many lawns can Jen mow in a week? ________ • Who has the Absolute Advantage in lawn mowing? ________________ • Who has the Absolute Advantage in laundry? ________________ 84 70 14 35 Jen Tony

  6. *Hint: You calculate opportunity cost by calculating what you are giving up when you make only one of each item. Ex.) If Jen mows only 1 lawn, how many loads of laundry is she giving up? Put your answer in the table next to Jen under laundry. 1/6 6 1/2 2

  7. 1/6 6 2 1/2 • Who has the Comparative Advantage in lawn mowing? __________________ • Who has the Comparative Advantage in laundry? __________________ • Applying the Law of Comparative Advantage, who should mow lawns? ___________________ Jen Tony Jen

  8. How many cars can China make in a day? ________ • How many tv’s can Japan make in a day? ________ • Who has the Absolute Advantage in car production? ________________ • Who has the Absolute Advantage in tvproduction? ________________ 1600 4000 CHINA JAPAN

  9. 1/2 2 5 1/5

  10. 1/2 2 5 1/5 • Who has the Comparative Advantage in Car production? __________________ • Who has the Comparative Advantage in tvproduction? __________________ • Applying the Law of Comparative Advantage, who should produce Cars? ___________________ CHINA JAPAN CHINA

  11. How many Cakes can Robin make in a week? ________ • How many dozens of Cookies can Jake make? ________ • Who has the Absolute Advantage in Cake production? ________________ • Who has the Absolute Advantage in Cookie production? ________________ 70 105 Jake Robin

  12. *Hint: You calculate opportunity cost by calculating what you are giving up when you make only one of each item. Ex.) If Robin makes only 1 cake, how many dozens of cookies is she giving up? Put your answer in the table next to Robin under cakes. 2 1/2 1 1

  13. 2 1/2 1 1 • Who has the Comparative Advantage in Cake production? __________________ • Who has the Comparative Advantage in Cookie production? __________________ • Applying the Law of Comparative Advantage, who should produce Cakes? ___________________ Jake Robin Jake

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