Students will revisit concepts from the Spheradell globalization simulation in order to explore production possibilities, opportunity cost, and comparative advantage. Students will read sections of an essay about comparative advantage and cooperate to create a class acrostic poem about comparative advantage before creating personal pyramid summaries. After reading, students will apply what they have learned about comparative advantage to the situation in Spheradell and to their own lives.

Please note all student handouts are available for your use in the PDF and Google Document download options.

Objectives

• Explain how comparative advantage makes trade beneficial for both sides
• Summarize and synthesize a policy essay about comparative advantage
• Apply the concepts of opportunity cost, comparative advantage, and mutually beneficial trade to multiple contexts

Vocabulary

• Production possibilities
• Absolute advantage
• Opportunity cost
• Specialization
• Comparative advantage
• Mutually beneficial trade

Materials

• Warm‐​up worksheet
• Warm‐​up application
• Spheradell example applications worksheet
• Five essay segments with acrostic assignments
• Pyramid summary worksheet
• Exit ticket

Teachers and students must have completed the Globalization Day 1 simulation for the Spheradell references in this lesson to be most effective. Students should have some knowledge of production possibilities and opportunity cost. Place desks in 5 groups. If you completed the Day 1 simulation, you may want to leave desks in this 5‑group arrangement for the entire week.

Have students complete the warm‐​up worksheet by addressing the simulation as follows:

• You and your best friend have all the same teachers. You have straight A’s; your friend is not as academically inclined and gets B’s and C’s. There is a carnival tonight, and you both want to go, but your English teacher and your math teacher have conspired to make it impossible. Your English teacher has assigned every student a different poem with 10 reading comprehension questions. Your math teacher has assigned you to do the 30 algebra problems on page 12, and they assigned your friend 30 different algebra problems on page 15. You can accurately complete 4 reading comprehension questions per hour, and your friend can complete 2 reading comprehension questions per hour. You can accurately complete 15 algebra questions per hour. Your friend can accurately complete 10 algebra questions per hour. Your friend has suggested that one of you should do the English homework and one of you should do the math.
  • Should you each do your own homework, or should each of you specialize in one subject? Why? (Since this is a warm‐​up, any answer is fine here as long as there is reasoning. You might even give the ethical answer that each should do their own homework because it is the honest option. The economically correct answer is that you and your friend should specialize.)
  • Who is better at reading comprehension? How can you tell? (Students should answer that they are better at reading comprehension than their best friend is. Students can calculate this by answering that they can complete 5 reading comprehension questions in an hour but that their friend can complete only 2.)
  • Who is better at algebra? How can you tell? (Students should answer that they are better at algebra than their best friend is. Students can calculate this by answering that they can complete 15 algebra questions in an hour but that their friend can complete only 10.)
  • How long would it take you to complete your homework alone? (According to the text, the student should take 4 and a half hours to complete the homework alone.)
  • How long will it take your friend to complete the homework alone? (According to the text, the student’s best friend will take 8 hours to complete the homework alone.)
  • Your best friend begs you to specialize and trade. Which task should you do? Why? (Again, since this is a warm‐​up and students may not think to calculate opportunity cost, any answer with reasoning is acceptable. The correct answer is that the student should do the reading comprehension questions and that their best friend should do the math.)
• Discuss answers with students and hand out the warm‐​up, follow‐​up, and Spheradell example calculations.

Have students work as a whole class through the reading and the worksheet detailing production possibilities, absolute advantage, opportunity cost, and comparative advantage.

• Production possibilities, or the amount of two different goods or services that can be produced in a given time, can be represented by a simple graph, with one product or service on the x‑axis and the other on the y‑axis. Use the graphs below to illustrate the production possibilities for you and your best friend from the warm‐​up. (Note that in these examples, the production‐​possibilities frontier is represented as a straight line. Economists rarely draw it this way, as opportunity cost is rarely consistent. Few products require all the same natural, human, and capital resources combined in exactly the same way. Typically, the production‐​possibilities frontier is curved. For our purposes, we are going to keep opportunity cost consistent.)
• The graph for you should look like this:

• The graph for the best friend should look like this:

• A producer has an “absolute advantage” when it can produce more of both possible products than can its trade partner. In the warm‐​up example, who has an absolute advantage? Why? (The student—you—can produce more reading questions and algebra problems than their best friend.)
• Economists use the concept of opportunity cost, the next‐​best option, to determine which producer has a comparative advantage. Use the warm‐​up to answer the following:
  • What is your opportunity cost for each reading comprehension question you answer? Divide the number of algebra problems you can do in an hour by the number of reading comprehension problems you can complete in the same time. (Each reading comprehension question costs 3.75 algebra problems.)
  • What is your opportunity cost for each algebra problem you answer? Divide the number of algebra problems you can complete in an hour by the number of reading comprehension questions you can answer in the same time. (Each algebra problem costs 0.27 reading comprehension questions.)
  • What is your best friend’s opportunity cost for each reading comprehension question? Divide the number of algebra problems your friend can do in an hour by the number of reading comprehension questions your friend can answer in the same time. (Each reading comprehension question costs 5 algebra problems.)
  • What is your best friend’s opportunity cost for each algebra question? Divide the number of algebra problems your friend can complete in an hour by the number of reading comprehension questions your friend can answer in the same time. (Each algebra problem costs 0.2 algebra problems.)
• Comparative advantage refers to the producer who can produce the product at the lower opportunity cost.
  • Who has the comparative advantage in reading comprehension questions? (The student—you—produces reading comprehension questions at an opportunity cost of 3.75 algebra problems, while the best friend produces them at the opportunity cost of 5 algebra problems. You have the comparative advantage.)
  • Who has the comparative advantage in algebra problems? (The best friend produces algebra problems at an opportunity cost of 0.2 reading comprehension questions, while you produce them at an opportunity cost of 0.26, giving the best friend the comparative advantage.)
  • If you and your best friend each specialize in the task for which you have the comparative advantage, and you work simultaneously, how long will it take you to complete your homework so that you can go to the carnival? (It will take you 5 hours to complete the reading comprehension question, and your friend will be done in 6 hours. Since you are waiting until everything is done, the total time will be 6 hours, which is less time than it would have taken to wait for your friend to complete all of their tasks on their own.)
  • How do you and your friend benefit from specialization and trade? (You get to spend an extra 2 hours at the carnival.)

Spheradell example applications:

• Spheradell is looking to bring more color to the Glintopolis! In its new buildings, it will use both emeralds and rubies. Skydell Country and Aberria Country mine precious gems. Within a year, Skydell Country can produce 50 pounds of emeralds or 40 pounds of rubies. Aberria Country can produce 60 pounds of emeralds or 60 pounds of rubies.
  • Which country has the absolute advantage? Why? (Aberria Country has the absolute advantage because it can produce more emeralds and more rubies.)
  • Graph the production‐​possibilities frontiers.
    • Skydell Country

• Aberria Country

• Opportunity Cost

• Which country has the comparative advantage in emeralds? (Skydell Country)
• Which country has the comparative advantage in rubies? (Aberria Country)
• Based on what you have learned so far, put the following paragraph into your own words:
  • Comparative advantage, like language, is ubiquitous. No one who interacts with anyone can escape its operation, which occurs every moment of every day to everyone everywhere. Also like language, comparative advantage was not invented; it arises naturally whenever humans interact with each other. Nor can its array of vast details be reengineered at will to achieve some visionary’s dream. And each of us uses comparative advantage to our benefit without being aware that we’re doing so. Except for a handful of economists, almost no one knows about comparative advantage, and therefore, almost no one can describe it or articulate its logic.
  • Student answers will vary, but expect that students will say that we naturally trend toward doing the things at which we excel and trading with others for things with which we struggle. Even when we are better than our friends at everything, our time is scarce, and it becomes beneficial for us to farm out certain tasks to save ourselves time.

Reading comprehension and summarization strategy:

• Hand each individual in the 5 groups a copy of an essay excerpt with an acrostic on the back.
  • Each group is to read the essay section it is given and create an acrostic summary using the word on the back of the page. For each letter of the given word, the group will write a sentence that helps to summarize the piece as a whole. For example, if I had to summarize the instructions in an acrostic poem, it would be as follows:
    • Read the section.
    • Elucidate the meaning of the text.
    • Address the concept as a whole.
    • Determine the most important parts.
  • Group 1 (Glintopolis) will read “What Is Comparative Advantage? (Part 1)” and write an acrostic summary using the word “Comparative.”
  • Group 2 (Skydell Country) will read “What Is Comparative Advantage? (Part 2)” and write an acrostic summary using the word “Advantage.”
  • Group 3 (Scarlowe Country) will read “What Are Some Comparative Advantage Surprises? (Part 1)” and write an acrostic summary using the words “Makes Trade.”
  • Group 4 (Aberria Country) will read “What Are Some Comparative Advantage Surprises? (Part 2)” and write an acrostic summary using the word “Mutually.”
  • Group 5 (Brindlebrook Country) will read “How Does Comparative Advantage Apply to International Trade?” and “Conclusion” and write an acrostic summary using the word “Beneficial.”
  • For further information, the entirety of the essay can be found here: https://​www​.cato​.org/​p​u​b​l​i​c​a​t​i​o​n​s​/​c​o​m​p​a​r​a​t​i​v​e​-​a​d​v​a​n​t​a​g​e​#​w​h​a​t​-​a​r​e​-​s​o​m​e​-​c​o​m​p​a​r​a​t​i​v​e​-​a​d​v​a​n​t​a​g​e​-​s​u​r​p​rises. Sections on government interventions and subsidies should be withheld until after the Day 3 simulations.
• Give students 20–25 minutes to work together on summaries before having each group report out and read the class “poem” about comparative advantage. If you have a display wall for student work, it might be helpful to post the most readable examples on the wall in the order of the sentence it creates. This will provide an important reminder about the concept of comparative advantage throughout the remainder of the unit.
• Create jigsaw groups consisting of 1 member of each country of Spheradell and hand each student a pyramid summary sheet. Instruct students that they are going to summarize the findings of all 5 groups into a pyramid. The top line should contain 1 word that captures the theme of the article. The second line should have 2 words that are important to the understanding of the text. The third line should have 3 vocabulary words that are important for the understanding of comparative advantage. For lines 4–7, students should be writing complete sentences with the requisite number of words. Here is an example:
  • trade
  • comparative advantage
  • lower opportunity cost
  • trade is mutually beneficial
  • both countries benefit from trade
  • each produces the lower‐​cost item
  • production is more efficient when countries trade

Hand students exit ticket worksheet and allow time to repeat and share out if possible.

• Describe the concept of comparative advantage in your own words. (Students should be describing a system in which an economy produces whatever it can produce at the lowest opportunity cost and trades for what it would be able to produce at a higher opportunity cost.)
• Think back to the Spheradell simulation. What did your country produce at the lowest opportunity cost? Why might this have been true? (This answer is going to vary for students in different groups based on which country they were in for the simulations. For Glintopolis, this was ovens; for Skydell Country, it was elderbloom fruits; for Scarlowe Country it was copper cups; for Aberria Country it was wheat; and for Brindlebrook Country it was skybloom flakes.) Students might come to the conclusion in the first round of the simulation that their country was producing something that was already native to the country or that was already easiest to produce.
• What do we mean when we say that trade is mutually beneficial? (Students should indicate that when 2 people or 2 countries trade, both sides benefit from that trade.)
• Describe a time you made a trade that was mutually beneficial. What did you give? What did you get? Why was it mutually beneficial?