FrontPage: NNIGN Last Word: Section Review Chapter 1 due Friday The fun coupon set that shows where your future dates will take place. The Etsy ring that.

FrontPage: NNIGN

Last Word: Section Review Chapter 1 due Friday

The fun coupon set that shows where your future dates will take place.

The Etsy ring that will let her know exactly where she stands.

28 Valentine's Day Gifts To Lower Your Girlfriend's Expectations

Opportunity Cost, Specialization, and the PPC

Chapter 1, Section 2Academic Economics

Directions for the simulation

• Assume the role of a farmer– ½ are Farmer A, ½ are Farmer B

• Get a copy of your “Farmers directions”– Examine your goal. Choose a production option.

• Get your potatoes and pineapples from your “farmland” region.

• Trade with the same person every time– After each round, copy down how well you did on the ledger.

• Try to meet your goal by varying your production option

Debrief • How did it feel to be a farmer in region A?– In region B?

• In real life, why might two different areas/countries have different production capabilities?– Can you think of examples?

• How were you able to meet your goal?– Specialization and trade

• Did one group of farmers benefit more from specialization and trade?– Why or why not?

Goals for today

• Understand why specialization and trade are more beneficial than “going it alone”

• Learning what a PPC graph is and how it is used

• Identify the terms opportunity cost, absolute advantage, and comparative advantage.

Production Possibilities Curve/Frontier

• The production possibilities curve shows the maximum combination of goods and services that can be produced from a given amount of resources.

• Classic Example—military spending vs. domestic programs (“guns or butter”)

• Using a production possibilities curve, a producer can decide how to use resources.

Marooned

• Read the story of Selkin and Pirate Jack. As you read, take note of the definitions of the following terms:– Absolute advantage– Comparative advantage– Specialization

• Absolute advantage: the ability to produce more of a good or service than competitors, using the same amount of resources

• Opportunity Cost: the value (or “cost”) of making a choice to produce something different

Specialization: performing only the function that you do best, or hold a comparative advantage in

• Comparative advantage: when one person’s opportunity cost for producing an item is lower than anothers

Rank the top 5 things you would do with an extra hour of time tonight…

• Opportunity cost = The value of the next best alternative to your choice which is given up– All remaining options are “trade-offs”, but next

best to your choice is the opportunity cost