The Economic History of the United States 9

The Economic History of the United States 9

1. Lecture 9
The Economic History of the United States

2. Family History Center
237 East 600 South St. George, Utah

6. Adam Smith
(1723 - 1790) 67
 The Theory of Moral
Sentiments (1759)
An Inquiry into the
Nature and Causes of the
Wealth of Nations (1776)

7. 1776

8. Opportunity Cost
The next highest valued
thing you can do with your
time.

9. Comparative
Advantage
Opportunity Costs

10. Comparative Advantage
Someone who has a lower
opportunity cost thatn
you

11. Comparative Advantage
I don’t have to give up
as much as you do

12. Who should mow my lawn?
Me - one hour
Son - three hours

13. Who should mow my lawn?
Who is best is not important
Must know the opportunity costs

14. Me - Can earn $100 an hour doing economics
Son - Can earn $15 an hour working at McDonalds

15. Who every has a lower opportunity cost has a
comparative advantage.
The son has a lower opportunity cost

17. Adam Eve
Total
Hours
Make a
Hook
3 2 5
Catch
a Fish
4 1 5
Total
Hours
7 3 10
No Trade
2 Hooks and 2 Fish
10 Hours - 5 Hours per Fish

18. Adam Eve
Total
Hours
Make a
Hook
Cost 3/4
fish
Cost 2
fish
Catch
a Fish
Cost 4/3
hooks
Cost 1/2
hooks
Total
Hours
Do-It-Yourself Costs

19. Adam Eve
Total
Hours
Make a
Hook
2 hooks
6 hours
6
Catch
a Fish
2 fish
2 hours
2
Total
Hours
6 2 8
With Trade
2 Hooks and 2 Fish
8 Hours - 4 Hours Per Fish