Specialization
This term refers to the idea of splitting the productive process into multiple people instead of one.
Division of labor.
Robinson and Caruso are stranded on a desert island. Robinson can gather 20 coconuts or 15 bananas. Caruso can gather 10 coconuts and 5 bananas.
This individual has the absolute advantage in this scenario.
Robinson.
This is a tax on imports.
Tariff.
This refers to goods and services brought into this country from abroad.
Imports.
This is a benefit of specialization.
Saves time, increases worker skill, leads to specialized equipment.
Robinson and Caruso are stranded on a desert island. Robinson can gather 20 coconuts or 15 bananas. Caruso can gather 10 coconuts and 5 bananas.
The individual with comparative advantage can be determined by finding which of them has the lowest value of this fraction.
Opportunity cost.
This presidential candidate in 2024 is running on a platform of high tariffs.
Former President Donald Trump.
This refers to goods and services sent to other countries from the US.
Exports.
The expansion of trade has this effect on opportunities for specialization.
Expands them.
This is the "formula" for opportunity cost.
What you give up/what you get instead
This is the intention behind high tariffs.
Protect domestic (home) production from foreign competition.
This is the practice in which there are no barriers to moving goods and services between countries.
Free trade.
This is a prominent example of attempting to produce something by yourself that normally requires specialization and division of labor.
Chicken sandwich.
An individual with the absolute advantage in a situation can still benefit from a less productive person through this activity.
Trade.
This is one of the four types of economic protectionism (from the Free Trade Research assignment)
Protective tariff, import quotas, trade embargo, voluntary export restraints.
This is the idea of guarding your own economy from foreign competition by placing restrictions on trade.
Protectionism.
This ancient invention allowed humans to quit hunting and gathering and start specializing in specific tasks.
Agriculture/farming.
Gary can make 150 cappuccinos or ring up 160 customers per day. James can make 120 cappuccinos or ring up 150 customers per day.
This worker has the comparative advantage (use opportunity cost) at making cappuccinos.
Gary.
This is a historical example of free trade or protectionism.
Ex. Trump tariff on foreign automobiles.
What non-political and non-economic reason can cause absolute and comparative advantage in real life, as we saw with avocado production in Mexico?
Geography.