This is a video created for Dr. Dirk Mateer's Econ 002 class at Penn State University. This is the project of group 152 of section 3. This video was made in imovieHD.
Here is our script:
Opportunity Cost the highest-valued alternative forgone in making any choice. In other words: what you would have done if you hadnt done what you did. Its the second best option.
Heather only has a small amount of free time today. She needs to decide what to do with that time, so she decides to make a list of her favorite activities.
Heather thinks the best thing to do is eat soup, but her next choice would have been to punch a sucka out since punching a sucka out is the highest-valued alternative to eating soup according to her. This means that the opportunity cost of eating soup is punching a sucka out. Even though she would have also liked to find proof of alien existence and write to her prison inmate pen-pal, she could only do one thing in her free time. As such the opportunity cost is not all of the things that she could have done but the one thing she would have done had she not decided to eat soup.
Absolute Advantage--When something or someone is the best at completing two competing tasks.
Comparative Advantage--When something or someone is able to complete a task they are not the best in at a lower marginal opportunity cost than the one who is best.
Amy and Jim are friends and have come to an agreement to share notes from the class they have together. This means that only one of them has to take notes in a given day. However, both students need to show up to class in case of a pop quiz. Amy needs to sit in the front because of her poor eyesight, while Jim prefers to sit in the back so he doesnt strain his neck when looking at the projector screen. A simple analysis shows that Jim has the absolute advantage in both sleeping in class and taking notes because Jim writes faster than Amy and can sleep in the back without the professors notice. However, Jim cannot do both activities at once. An analysis of the marginal benefits of doing each activity shows that Amy has the comparative advantage in taking notes. She cannot sleep in the front of the class without fear of the professor noticing, so her benefit is much lower than Jims in this activity. Comparative advantage allows both Jim and Amy to get the notes from class while one of them gets sleep. It creates a situation with the best possible outcome and the highest productivity.
Here are the links of the websites and the titles of the books used for research:
http://www.econlib.org/library/Enc/OpportunityCost.html
http://www.econlib.org/library/Topics/Details/comparativeadvantage.html
Macroeconomics: Private Markets and Public Choices by Robert B. Ekelund Jr., Rand W. Ressler, and Robert D. Tollison
Economics Today: The Micro View by Roger LeRoy Miller
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7:01Absolute, Comparative Advantage, Opportunity Costby lseexternal22,889 views
I hope that was not a permanent marker!
dmateer 2 years ago
It was (a purple sharpie), but he washed it off right away so he only had a slightly purple complexion for a day rather than the drawings on his face.
ofa5003 2 years ago