Materials

• Class notes

Instructional Activities

1. Review the content from the previous session.
   
   
2. Explain to students that certain countries seem to have a natural advantage over other countries. Use various sports teams as an example. The teams that have more money are able to draw the better players, and the better the players, the more money the teams make, as fans want to see the better players. In addition, sports teams in large populated areas develop a loyal following.
   
   
3. Display the term comparative advantage on the board or overhead. Explain that comparative advantage means that countries will export goods and services that they can produce at lower relative costs than other countries — i.e., a country enjoys comparative advantage when it has relative advantage over other countries in the production of certain products because it can produce the products at a lower opportunity cost (define this term) than the others countries can. Further explanation of comparative advantage, as well as of absolute advantage, may be found at the following Web site: <http://www.digitaleconomist.com/ca_4010.html>
   
   
4. Explain the following effects of comparative advantage on international trade:
   • Enables nations to produce goods and services that they can market for profit
   • Influences development of industries (e.g., steel, aircraft, automobile, clothing)
   • Supports specialization and efficient use of human resources
   
   
5. Explain that since no country has all the resources it needs, countries become dependent on other countries to meet their needs. This interdependence as a result of unequal distribution of resources leads to
   • specialization in goods and services that a country can market for profit
   • exchange of goods and services (exporting what a country can market for profit; importing what a country cannot produce profitably).
   
   Provide examples of this interdependence. For example, Japan sells manufactured products and purchases food and raw materials to meet its needs.
   
   
6. Assign a teacher-selected reading, worksheet, or other reinforcement activity, using available teacher resources.