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Warm-Up

Warm-Up. If you were a contractor building a new house, which people would you need to hire? Why wouldn’t one contractor just do everything on his/her own?. Comparative Advantage: The ability to produce something at a lower opportunity cost than other producers. Law of Comparative Advantage.

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Warm-Up

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  1. Warm-Up If you were a contractor building a new house, which people would you need to hire? Why wouldn’t one contractor just do everything on his/her own?

  2. Comparative Advantage: The ability to produce something at a lower opportunity cost than other producers. Law of Comparative Advantage The individual with the lowest opportunity cost for producing a particular good should specialize in the production of that good.

  3. Who should specialize in what? Example: Should Mrs. X Grade Her Own Papers? Mrs. X can grade 50 tests in one hour, but she can also spend that time tutoring a student for $100/hour. Her TA can grade 25 tests in one hour or use that time scooping ice cream for $8/hr. Opportunity Cost for teacher to grade papers? Opportunity Cost for student to grade papers?

  4. In Groups • Define the concept • Include an example/real life scenario • Create a diagram/drawing to represent the concept.

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