Goals: The students will
1. Analyze opportunity costs to determine a
comparative advantage.
2. Examine how specialization can lead to
greater productivity.
3. Explore the effects of globalization on the
US economy.


Definition – a process by which individuals
and businesses in any part of the world are
much more affected by events elsewhere than
they used to be.
Definition – the growing integration of the
national economies of the world.

Marisa and Jaheed attend MHS and are in the
same economics class. Tonight’s assignment
contains six math problems and three English
problems for a total of nine problems. This
assignment gives the students the option of
working in a group or individually. MHS state
championship basketball game is tonight and
both students need to finish their homework
before the game. Should Marisa and Jaheed
work separately or together?
Student
English
Problems in
one hour
Time per
English
problem
Math
problems in
one hour
Marisa
4
6
Jaheed
3
4
Time per
math
problem

It takes Marisa ____ minutes to finish alone.
It takes Jaheed ____ minutes to finish alone.

Consider:

◦ If she spends all her time on English and none on
math, Marisa can complete four English problems in
one hour. If she spends it all on math, she can
complete six math problems in one hour.
◦ If he spends all his time on English and none on
math, Jaheed can complete three English problems
in one hour. If he spends all his time on math, he
can complete four math problems in one hour.

Answer the following questions:
◦ How long does it take Marisa to complete one problem
of English?
15 minutes (60 divided by 4)
◦ How long does it take Marisa to complete one problem
of math?
10 minutes (60 divided by 6)
◦ How long will it take Marisa to complete the entire
assignment?
105 minutes (60 + 45)

Answer the following questions . . .
◦ How long does it take Jaheed to complete one problem
of English?
20 minutes
◦ How long does it take Jaheed to complete one problem
of Math?
15 minutes
◦ How long does it take Jaheed to complete the entire
assignment?
150 minutes (60 minutes + 90 minutes)
Student
English
Problems in
one hour
Time per
English
Problem
Math
problems in
one hour
Time per
math
problem
Marisa
4
15 minutes
6
10 minutes
Jaheed
3
20 minutes
4
25 minutes
1.
1.
1.
What do you notice about these numbers?
Marisa can do both faster.
Both students can do math faster.
If Marisa is faster in both, why would she
work with Jaheed?
If it saves time – she cannot work on both
subjects at once.
If they do share, who will do what and why?
There are two economic concepts at play:
comparative advantage and opportunity
costs.

Opportunity costs:
◦ Whatever must be given up to obtain some item.

Comparative advantage:
◦ The comparison among producers of a good
according to their opportunity cost.
◦ Marisa and Jaheed each should specialize in the
subject in which they have a comparative
advantage.
Marisa
In one hour, Marisa can complete
either 6 math problems or 4
English problems.
Jaheed
In one hour, Jaheed can complete
either 4 math problems or 3
English problems.
Time to complete 6 math problems Time to complete 4 math problems
= time to complete 4 English
= time to complete 3 English
problems.
problems.
Tradeoff: 1 English = 6/4 math, or
1.5 math
Tradeoff: 1 English = 4/3 math, or
1.3 math
Tradeoff: 1 math = 4.6 English, or
.67 English
Tradeoff: 1 math = ¾ English, or
.75 English

Looking at the chart, who gives up less math
to complete one problem in English? In other
words, who has the lowest opportunity cost
of doing a problem on English?
◦ Jaheed: 1 English costs him 1.3 math and costs
Marisa 1.5 math.

Who gives up less English to complete one
problem of math? Or, who has the lowest
opportunity cost of doing a problem of math?
◦ Marisa: one math costs her .67 English and costs
Jaheed .75 English.



Since Jaheed has the lowest opportunity cost
of completing a problem of English
homework, he has a comparative advantage
in English.
Since Marisa has the lowest opportunity cost
of completing a problem of math homework,
she has a comparative advantage in math.
Each student should specialize in the subject
in which they have the comparative
advantage.
Student
Comparative
Advantage
Time per
problem
Total time to
complete
subject
Marisa
Math
10 minutes
60 minutes
Jaheed
English
45 minutes
45 minutes

If they work together, Jaheed and Marisa can
have the entire homework assignment
completed in 60 minutes.
◦ Alone it would have taken Marisa 105 minutes.
◦ Alone it would have taken Jaheed 150 minutes.

Even though Marisa could have done both
assignments faster than Jaheed working alone
(this is called absolute advantage), by
specializing, Marisa saved 45 minutes and
Jaheed saved 90 minutes.

What application does the foregoing problem
have to how countries could work together
for everyone’s benefit?