Transcript Module 4

Module 4
Jan 2015
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Trade – people divide tasks among
themselves and each person provides a good
or service that others want in return for
different goods and services.
Gains from Trade – by dividing tasks and
trading, people can get more than they would
if they relied solely on themselves.
Specialization – different people engage in
different tasks
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White board activity
Susie can make 24 cakes in a day OR 16 pies.
Keith can make 20 cakes in a day OR 14 pies.
Create a chart showing opportunity cost:
 Susie
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One cake _____ pie
One pie
_____pie
Keith
____cake
____cake
 Susie
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One cake 2/3 pie
One pie
3/2cake
Keith
7/10 pie
10/7cake
Yes, I reduced my fractions – you need to do
that, also.
On your white boards, please show me the
PPC for each person, Susie on the left and
Keith on the right (using their original
numbers)
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An individual has a comparative advantage in
producing something if the OC of that
production is lower for that individual than
for others.
Which is less 2/3 or 7/10?
Which is less 3/2 or 10/7?
Now, who should make cakes and who should
make pies?
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Being able to produce more output with a
given amount of input than others can with
the same resources.
So even though Susie can make more cakes
and pies, everybody is better off when Keith
makes the pies.
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Read Modules 1-4
Answer the following questions on pages 3233: 1, 4, 5, 8, 12