ECONOMICS RULES. example: IN 1 MINUTE. limited resources/unlimited n!ds HELP YOUR PARTNER REVEAL ALL 5 CONCEPTS ON THE BOARD

Transcription

1 ECONOMICS RULES IN 1 MINUTE HELP YOUR PARTNER REVEAL ALL 5 CONCEPTS ON THE BOARD YOU CANNOT USE THE ANY PART OF THE WORD AS A CLUE TO HELP YOUR PARTNER FOCUS ON DEFINING THE CONCEPT, NOT SOUNDING OUT THE WORD example: limited resources/unlimited n!ds

2 ECONOMICS 1. Free Market System 2. Firms 3. Production Possibilities 4. Macroeconomics 5. Output

3 ECONOMICS 1. Consumers 2. Utility 3. Centrally-planned System 4. The Invisible Hand 5. Inputs

4

5 UNIT 1. 6 SPECIALIZATION ANDTRADE

6 THE benefits OFTRADE PRODUCTION POSSIBILITIES FOR FRANCE GREATER UTILITY GOOD A A B C D GREATER ALLOCATIVE EFFICIENCY THRU GREATER QUANTITIES/CHOICE DOMESTIC GOODS & IMPORTED GOODS TOGETHER MEET NEEDS GREATER OUTPUT GREATER PRODUCTIVE EFFICIENCY MEANS LESS WASTED RESOURCES GOOD B SPECIALIZATION AND EFFICIENCY SHIFTS THE PPC OUTWARD

7 TRADE S TWO NATIONS WILL ONLY ENGAGE IN TRADE IF THE TRADE TERMS ARE MUTUALLY BENEFICIAL BUT WHAT IF A COUNTRY IS JUST BETTER AT PRODUCING A GOOD? THIS COUNTRY HAS THE ABSOLUTE The country with this advantage can simply PRODUCE MORE OUTPUT or can produce the same amount USING FEWER RESOURCES

8 CALCULATING ABSOLUTE COFFEE CORN UNITED STATES 350 billion 800 billion PANAMA 700 billion 50 billion 1. WHICH NATION HAS THE ABSOLUTE IN COFFEE PRODUCTION? 700B TO 350B 2. WHICH NATION HAS THE ABSOLUTE IN CORN PRODUCTION? 800B TO 50B

9 CALCULATING ABSOLUTE SYRUP CHEESE CANADA SWEDEN 1/2 hour 3/4 hour 2 hours 1.5 hours 1. WHICH NATION HAS THE ABSOLUTE IN SYRUP PRODUCTION? 1/2HR TO 3/4HR 2. WHICH NATION HAS THE ABSOLUTE IN CHEESE PRODUCTION? 1.5 HRS TO 2HR

10 TWO NATIONS WILL ONLY ENGAGE IN TRADE IF THE TRADE TERMS ARE MUTUALLY BENEFICIAL THIS COUNTRY HAS THE TRADE S WHAT IF A COUNTRY IS MORE EFFICIENT AT PRODUCING A GOOD? The country with this advantage can produce at the LOWEST PER UNIT OPPORTUNITY COST and therefore should SPECIALIZE IN AND EXPORT THAT GOOD

11 MORE EFFICIENT MUTUALLY BENEFICIAL THE NATION THAT EXPORTS IS THE MOST PRODUCTIVELY EFFICIENT SPECIALIZATION ENSURES SCARCE RESOURCES ARE EFFICIENTLY USED TRADING NATIONS CAN IMPORT GOODS CHEAPER THAN THEY CAN PRODUCE THEM DOMESTICALLY

12 CALCULATING COAL OIL UNITED STATES 500 million tons 100 million barrels 1. IN, WHAT IS THE OPPORTUNITY COST OF PRODUCING ONE TON OF COAL? 1/5 ba!el of oil 2. IN, WHAT IS THE OPPORTUNITY COST OF PRODUCING ONE BARREL OF OIL? 5 tons of coal

13 CALCULATING COAL OIL CANADA 100 million tons 50 million barrels 1. IN, WHAT IS THE OPPORTUNITY COST OF PRODUCING ONE TON OF COAL? 1/2 ba!el of oil 2. IN, WHAT IS THE OPPORTUNITY COST OF PRODUCING ONE BARREL OF OIL? 2 tons of coal

14 This is an output question! COAL OIL UNITED STATES CANADA 500 million tons 100 million tons 100 million barrels 50 million barrels 1. WHICH NATION HAS THE IN COAL PRODUCTION? 1/5 ba!el to 1/2 ba!el 2. WHICH NATION HAS THE IN OIL PRODUCTION? 2 tons to 5 tons

15 COAL This is an output question! OIL UNITED STATES 500 million tons 100 million barrels CANADA 100 million tons 50 million barrels 3. SHOULD THESE TWO NATIONS TRADE? WILL THEY MUTUALLY BENEFIT? 4. WHICH NATION SPECIALIZES IN PRODUCING AND EXPORTING COAL? 5. WHICH NATION SPECIALIZES IN PRODUCING AND EXPORTING OIL?

16 CALCULATING JAPAN 40 CAN EITHER PRODUCE 30 TOMATOES (in tons) TONS OF TOMATOES OR TONS OF RICE WITH ITS CURRENT RESOURCES (Ceteris Paribus) In Japan, what is the opportunity cost of producing one ton of tomatoes? 25 1 ton of rice 2. In Japan, what is the opportunity cost of producing one ton of rice? 10 1 ton RICE (in tons) of tomatoes

17 CALCULATING 40 CAN EITHER PRODUCE 20 MEXICO TOMATOES (in tons) TONS OF TOMATOES OR TONS OF RICE WITH ITS CURRENT RESOURCES (Ceteris Paribus) In Mexico, what is the opportunity cost of producing one ton of tomatoes? 25 1/2 ton of rice 2. In Mexico, what is the opportunity cost of producing one ton of rice? 10 2 tons RICE (in tons) of tomatoes

18 JAPAN output question! 40 TOMATOES (in tons) MEXICO This is an Which nation has an absolute advantage in tomato production? Which nation has an absolute advantage in rice production? Which nation has a comparative advantage in tomato production? Which nation has a comparative advantage in rice production? Should these countries trade? RICE (in tons) 25 30

19 CALCULATING LACE NETS ITALY 2 hours 1 hour 1. IN, WHAT IS THE OPPORTUNITY COST OF PRODUCING ONE UNIT OF LACE? 2 Fishing Nets 2. IN, WHAT IS THE OPPORTUNITY COST OF PRODUCING ONE FISHING NET? 1/2 unit of lace

20 CALCULATING ITALY LACE NETS 2 hours 1 hour ABSOLUTE THIS GOES TO THE COUNTRY THAT CAN PRODUCE A UNIT OF A GOOD USING THE FEWEST INPUTS This is an INPUT question! OOK T T I E TIM IN THE OF GOOD A, I A UNIT UCH M O S D E PRODUC UCE D O R P O T VE A H D L U CO B. D O O G OF THIS GOES TO THE COUNTRY THAT CAN PRODUCE A UNIT OF A GOOD WHILE GIVING UP THE SMALLEST POTENTIAL OUTPUT OF THE OTHER GOOD

21 CALCULATING ABSOLUTE LACE NETS ITALY 2 hours 1 hour BRAZIL 3 hours 2 hours 1. WHICH NATION HAS THE ABSOLUTE IN LACE PRODUCTION? 2 hours to 3 hours 2. WHICH NATION HAS THE ABSOLUTE IN NET PRODUCTION? 1 hour to 2 hours

22 CALCULATING LACE NETS ITALY 2 hours 1 hour BRAZIL 3 hours 2 hours 3. WHICH NATION HAS THE IN LACE PRODUCTION? 1.5 nets to 2 nets 4. WHICH NATION HAS THE IN NET PRODUCTION? 1/2 lace to 2/3 lace

23 CALCULATING LACE NETS ITALY 2 hours 1 hour BRAZIL 3 hours 2 hours 3. SHOULD THESE TWO NATIONS TRADE? WILL THEY MUTUALLY BENEFIT? 4. WHICH NATION SPECIALIZES IN PRODUCING AND EXPORTING LACE? 5. WHICH NATION SPECIALIZES IN PRODUCING AND EXPORTING NETS?