Transcript SHOULD LEBRON JAMES MOW HIS OWN LAWN?

Launch list
• 1. Have your “buy vs. rent” HW out on your
desk.
Buy Vs. Rent?
1. What are some of the advantages to
renting instead of owning?
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Lower monthly and annual bills.
No property tax
No Maintenance
No transactional costs
2. For buying a home to be a better
deal, how long do you need to live in
that house?
• According to the article, you have to stay in
the house you purchased for at least 8 years.
3. What happens to housing prices when
there is a "mania toward homeownership."
• When there are more buyers than sellers, it
drives prices up.
4. What are the main advantages to
owning a house?
• The money you pay towards your mortgage
you will get back when you sell it.
• “its yours.”
5. List 3 downfalls of owning a house.
• Maintenance costs
• Housing prices could drop
• It can be more expensive
SHOULD LEBRON JAMES MOW HIS
OWN LAWN?
Opportunity Cost
• The value of your second best alternative or
what you refuse.
• Example– When Mr. Cochran sleeps in an
extra 10 minutes, he is giving up shaving.
• Example—When you buy a sub from
Shaheens, your opportunity cost was a value
meal at McDonald’s.
Comparative Advantage
• The ability to produce a good or service at a
lower opportunity cost than another producer.
Law of comparative advantage :
• Every nation has a production activity with a
lower opportunity cost than another nation.
• Trade between the two nations can be
beneficial to both if each specializes in the
production of a good with lower relative
opportunity cost.
Law of comparative advantage :
• While this law is fundamental to the study of
international trade, it also applies to other
activities, especially the specialization and the
division of labor.
Absolute Advantage
• The ability to produce more units of a good or
service than some other producer, using the
same quantity of resources.
LeBron and his Lawn…
VS
Time to Mow
Lawn
Lebron
Scotty
Opportunity
Cost
Lebron
Time to Mow
Lawn
2 hr
Opportunity
Cost
$10,000
Scotty
4 hr
$32
1. Who has an absolute advantage in
mowing the lawn?
2. Who has comparative advantage in
mowing the lawn?
3. From this example, we can see that LeBron
James is better than Scotty at mowing grass.
Would LeBron benefit from a trade?
Analysis
• We should specialize in what we're good at
producing and trade with others for things we
want.
• Examples?
Analysis
• Such a rule explains why:
• 1. Unless you are a farmer, you generally don't
grow our own food.
• 2. USA does not produce clothing in large
numbers.
• 3. Basketball or football players often specialize in
one position as opposed to playing all of them.
• 4. Your teacher may teach economics, history,
and government but likely does not also teach
physical education and chemistry.
• 1. Should a country produce everything it
wants? Why or Why not?
• 2. If Country A is better than Country B at
producing everything, would Country A gain
anything by trading with Country B?
• 3. When a new home is built, why doesn't one
contractor do everything: carpentry, electrical,
plumbing and landscaping?
BRAINSTORM
• 1. What are some goods and services in which
the United States likely has a comparative
advantage.