agenda graph making review globalization, trade, and protectionism notes pass out progress reports...

Agenda• Graph Making• Review• Globalization, Trade,

and Protectionism Notes

• Pass out Progress Reports

• Progress Reports are due by Wednesday

Line Bar

• Globalization• Opportunity Cost• Absolute Advantage• Comparative Advantage

• Answer: Comparative Advantage• Comparative advantage is the basis for all trade

between individuals, regions, and nations.

• Name for the process of increasing the connectivity and interdependence of the worlds markets and businesses

• “Shrinking the world” through sharing of information, ideas

• Made Possible through TV and Internet!

• Exists when a person/Country can produce more of a certain good/service than someone else in the same amount of time or can produce a good using the least amount of resources.

• Post Example:

• Student 1: Is the best artist and has the best handwriting• Student 2: Has decent handwriting but is a terrible artist.

• Should Student 1 do the whole project?

• A person or a nation has a comparative advantage in the production of a product when it can produce the product at a lower domestic opportunity cost than can a trading partner.

• Ex: You are in a group and making a poster. • Student 1: Has great handwriting and is an ok artist• Student 2: Is a good artist but has terrible handwriting.

• Which student should do which job?

BakeCakes

MakePizza

Ms. Cranston

2 cakes/hr.(1c = 3p)

6 pizzas/hr.(1p = 1/3c)

Mr.Neanover

4 cakes/hr.(1c = 2p)

8 pizzas/hr.(1p = 1/2c)

Mr. Neanover should specialize and trade if he has acomparative advantage (lower opportunity cost)in the production of one of the products.

Mr. Neanover has a lower opportunity cost in producing cakes; therefore, he should specialize in the production of cakes. Ms. Cranston has a lower opportunity cost in producing pizza; therefore, she should specialize in the production of pizza.

Interior of the Car

Exterior of the Car

Opportunity Cost:

• Two or more people, companies, or countries that become dependent(need) on each other.

BakeCakes

Pinson will specialize in cakes.

Make Pizza Gray will specialize in pizzas.

Ms. Moody 1c = 3pFor one cake, Moody would be willing to pay anything up to 3 pizzas.

1p = 1/3cFor one pizza, Moody will want more than 1/3 cakes.

Mr. Neanover

1c = 2pFor one cake, Neanover will want more than 2 pizzas.

1p = 1/2cFor one pizza, Neanover would be willing to pay anything up to ½ cake.

Imports• Goods and services

purchased from other countries

• If exports=imports then there is a balance of trade

Exports• Goods and services

sold to other countries

• More imports than exports= trade deficit

• More exports than imports= trade surplus

• The price of one country’s currency expressed in another country’s currency.

• Broken into buying and selling rate

• $1= .69 British Pounds

• $1= 15.18 Mexican Pesos

• $1= .95 Euros

• $1= 120.41 Japanese Yen

• $1= 6.21 Chinese Yuan

• Attempting to shield the economy from changes brought by trade

• The government contributing money to make the price lower.• Example: 1 Bushel of Corn = $70

• Government pays the farmer $40

• Consumers can buy corn now for $30

• Sanctions- Government restricting trade or investment in a country

• Embargo• Whatis it?

• A Maximum and/or aminimum amount of

something