Decisions, Decisions, Decisions

1. Texas Council on Economic Education Decisions, Decisions, Decisions

2. 1. What are three examples of personal financial literacy standards that students must know for graduation? Please review the standards for your grade level and/or subject: World Geography World History U. S. History Government Economics So, What’s WITH Those TEKS Anyway?

3. Presented by Laura Ewing President/CEO Texas Council on Economic Education 1801 Allen Parkway Houston, TX 77019 P: 713.655.1650 F: 713.655.1655 www.economicstexas.org Finding A Comparative Advantage, Including Your Own

4. From Focus: Globalization by the national Council for Economic Education Question: What is a comparative advantage? What is an example of a comparative advantage? Finding A Comparative Advantage, Including Your Own

5. Nations and individuals have a comparative advantage when their opportunity cost of producing a good or service is lower than the opportunity cost of other nations or individuals. A Comparative Advantage is…

6. Students use trade data for China and the U.S. to determine the comparative advantage for the countries. They study trade data for four mystery countries and predict what their comparative advantage might be and predict the names of the countries. They will apply the ideas by looking at Shaquille O’Neal and his abilities as a basketball player vs. rap singer. 4. Students will identify their own sources of comparative advantage by completing an inventory of skills and comparing those skills with several job descriptions. Lesson DeSCRIPTIONS

7. 1. Ask students to define a comparative advantage and give an example. 2. Remember: Individuals or nations have a comparative advantage in producing a good or service if they can produce it at a lower cost than other individuals or nations and then buy others’ goods /services that they can produce at a lower cost. 3. What do you think the topic of today is? Why study this topic? Procedures

8. What is your specialty? What do we mean by specialization in the business world? SPECIALIZATION

9. People do not produce all the things they need. They produce a good or service and then buy the other products. More goods and services are produced with specialization which reduces the cost. Do you cut your own hair? If no, who does? Why? What skills are needed to cut hair? What do you give up to learn how to cut hair? What is the opportunity cost of going to school to learn how to be a hair stylist? Specialization

10. Did early settlers, colonists and pioneers cut their own hair or have a family member cut it? Why or why not? Are the haircuts today better quality than the ones during the earlier times? Why or why not? Specialization

11. How and why do athletes specialize? How does this fit with the concept of comparative advantage? specialization among athletes

12. What goods and services does the U. S. produce well? What goods and services does China produce well? Use the term comparative advantage, imports and exports to explain about the trade relationship between the U. S. and China. COMPARATIVE ADVANTAGE FOR U.S. AND CHINA

13. U.S. top trade partners in 2004 for total trade were: 1. Canada $466 billion 2. Mexico $266 billion 3. China (see Activity 1) 4. Japan $184 billion 5. Germany $108 billion Activity 1

14. Working individually: read Activity I Answer the questions on page 86 using the charts on page 86 Discuss your findings with the class. Activity 1

15. See Visual I Natural resource endowments Government services and regulations (e.g. environmental regulations, educational opportunities, impact on productivity) Investment in technology Use Activity I on page 87 to answer: Which of these are examples for China? Which of these examples are for the U. S.? Three Sources of Comparative Advantage

16. Why the difference between the U. S. And China? Comparative Advantage Between U. S. and China

17. Use pages 88, 89, 90, 91, 92 Does the U. S. import the same products from each country? Circle the bullet that best describes the exports to the U. S. What is the most likely source of comparative advantage? Who do you think the countries really are? Activity 2: Mystery Countries

18. Honduras Germany India Nigeria Who are those mystery countries?

19. Individual A Skills/Characteristics 7’1” 310 pounds Bench press 310 miles Shoe size: 21 EEE NBA scoring average: 26.4 points/game Annual NBA salary $27 million 5 rap CDs; 2 million in CD sales What are examples of human ca?

20. Individual B Skills/Characteristics 6’4” tall 220 pounds Invited to try out with NBA Toronto Raptors, Cut after one week Annual NBA salary $0.00 11 rap CDs; more than 15,000,000 in CD sales who has comparative advantage?

21. A: Shaquille O’Neal, center for Miami Heat, LA Lakers, Orlando Magic B: Master P (aka Percy Miller) rap artist who played college basketball and tried out for several NBA teams. Who are A & B and who has the comparative advantage

22. Complete Human Capital Inventory on page 93 What skills do you have now and what skills yill you probably have in the future? Using a computer, complete page 94 Students share their answers Explore your own comparative advantage

23. Divide into groups of 4 You will role play a business consulting firm. Create a name for the business Mali government has hired you to increase Mali’s revenue from international trade . assessment

24. The three main sources of comparative advantage are: How do you summarize the main points of the activity? How will use this lesson in your class? Closure and Process

25. Looking at Visual 3, develop a brochure to provide recommendations. Include : • Describe the theory of comparative advantage • Mali’s potential comparative advantage • How does specialization can lead to gains from trade? What should mali do?