Presentation Skills

Слайд №1: Hello everybody. Today we are going to tell you about the economic phenomenon called "The paradox of Robinson Crusoe" and will show you the benefits of the comparative advantage.

Слайд №2: We have divided our topic into 3 parts. You can see them on the desk. Можно прочесть со слайда

Слайд №3: Back in seventeen hundreds Adam Smith was the first person to formalize a law of international trade. Smith figured out that if country specialized in producing those items where they had an absolute advantageand purchased items where they had an absolute disadvantage in production that would be better off. Слайд №4: By the way (ABSOLUTE ADVANTAGE MEANS THAT YOUR COUNTRY CAN PRODUCE THE GOOD AT A LOWER RESOURSE COST THAN OTHER COUNTRIES)

Слайд №5: That means, for example country A can produce food, using less labour than country B Слайд №6: and country B can produce books using less labour than country A, Слайд №7: so it will be mutually beneficial for countries to trade with each other.

Слайд №8: About a hundred years later David Ricardo developed a new theory. Слайд №9: He argued that England, let’s say, had an absolute advantage in most types of products, that is England can produce most items using fewer recourses, but it could still gain by specializing in production according to comparative advantage rather than absolute advantage. Слайд №10: COMPARATIVE ADVANTAGE MEANS THAT YOUR COUNTRY CAN PRODUCE AT THE LOWEST INDIRECT OR OPPORTUNITY COST.

There is a famed example of illustrating the different types of productive advantages in the book which is called “From here to economy”. Слайд №11: In this example the world is like an island. Слайд №12: On the island the only two people who seem to produce anything are Skipper and Gilligan. Because their group is locked on the island they need to provide for the basic necessities. Слайд №13: Since they are on the island it is natural that they will eat a lot of fish dinners and they also need some huts to live in.

Слайд №14: To built a hut Skipper needs twenty hours. Gilligan is much younger than Skipper and therefore he has less experience, so it takes him forty five hours to build a hut. Skipper can get down to a lagoon, catch a fish for two persons, come back, clean the fish, and cut the fish dinner in ten hours. Gilligan loses his equipment and initially burns the food taking fifteen hours to prepare an eatable fish dinner.

Слайд №15: One more piece of information we are going to need here: How many recourses does each of our producers have to work with? Well, Skipper is a pretty average guy working 40 hours a week 50 weeks a year. Слайд №16:  So he totally works 2000 hours a year. Слайд №17: Gilligan on the other hand is quite unskilled but he is going to work extrahard until he makes the things right. Gilligan works 3600 hours per year.  Think about it. Is not it a way things work in a real world. Which countries are more like Skipper? (with few skilled workers) And which are like Gilligan? ( with a lot of unskilled labour)