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Answer the following questions:

1) State an import you have purchased before.

a) What country produced it?

b) Why did you not purchase this type of product from a U.S. producing company?

2) What is something you specialize in? → For example: I specialize in teaching Economics.

3) What is something you outsource (pay someone else to do because your opportunity costs to do it are too high) → For example: I take my car to Jiffy Lube for an oil change, because it would take me all day to change the oil in my car. Besides the fact, I could seriously screw up my car.

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Lelia Lubowitz
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6 Dec 2018
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Related questions

Economics is nothing more than the study of scarcity and choice. It's called the Economizing Problem.

Economics is also the study of human action---why people make the choices they do.

We have finite (limited) resources and infinite (unlimited) demand for goods and services. We must, therefore, use rational decisions as to how to allocate these resources so that we can produce the goods and services that satisfy as many needs and wants as possible.

Needs are those things that make life possible---food, clothing, shelter, etc. Wants are the things that make life easier---glass in windows, carpet on the floor, a refrigerator to keep your beer cold, etc.

The resources we are trying to use wisely are not confined to money. We are talking about talent, ability, drive, ambition, etc. We can't all be brain surgeons. Nor would most of us want to be. We have different needs and wants that drive our ambitions. I have 5 grandchildren. The oldest two are twins---a boy and a girl. My granddaughter graduated from Idaho University with a bachelor's and a master's degree in accounting in 5 years. She passed the CPA exam on the first try. She now lives in Panama and works for BMW. She speaks, reads, and writes 4 languages, including English. Her brother finally graduated from the University of Arkansas in May 2016 after 8 years! Why did it happen this way?? They were raised the same way by the same parents. Why was my granddaughter drove to succeed and my grandson so listless?

Then there is subjective valuation and opportunity cost. Opportunity cost is nothing more than what you have to give up to do something else. Some of you might have to roll out of the bar or the party a little before you wanted to leave just to be able to attend my class. You might also have to give up some precious sleep. In any event, you had to give up something to attend my class. That's the opportunity cost. Remember, everything you do has a price (opportunity cost) that must be paid according to Harry Browne who wrote, How I Found Freedom in an Unfree World.) To do one thing you must give up the opportunity to do something else.

When people decide to buy a product or service they must decide if it will satisfy a need or want at a price they are willing to pay. The number one reason that people buy the products or services they do is called Personal Tastes or Preferences (Subjective valuation). Everyone has a different price they are willing to pay for the same product or service. Something is only worth what someone is willing to pay for it. That's a subjective valuation. Each of us has a different intensity of demand for the same products. Things you want I may not care for at all, and the opposite may also be true. This is why there is such a variety of goods and services offered on the market.

Subjective valuation is also fluid. As your income goes either up or down it changes your valuation of products and services. Have you ever wanted something so bad you would do almost anything to get it---an i phone or I pad?---but once you get the money you think, "do I really want this?' and you don't buy it. This is common. If it were not for a subjective valuation we would all be wearing the same style and color clothes and living in similar houses, etc. Wouldn't that be a wonderful world! I'd find the tallest building in downtown Orlando and see if I could fly! It is not the similarity in people that interests me. It's the differences. It's my desire not to be like everyone else that has driven my life. Don't strive to be someone else. Strive to find and be yourself. God save me from a terminal case of conventional wisdom!

There are 5 embedded questions.

Give me an example of subjective valuation.

what you think for this ? do you agree or disagree and why ?

I don’t think it’s wise for nations to begin raising tariffs and increasing subsidies when we are faced with a global recession. If a smaller country raises tariffs on a good they are importing, it might not have that big effect on the global economy. However, if a country like China, Japan, United States etc. decide to raise tariffs on imports, it could lead to a global increase in the average tariffs. In the article “Barriers to entry: A rise in protectionism would worsen the already grim outlook for world trade,” it talks about the worldwide average for tariffs. In 1986 they average 26%. If the big economies of the world start increasing tariffs, the rest of the world will eventually follow, leading to a global increase on tariffs. A rise in the tariffs would slow down the global economy even more in the long run. In the article it mentions how trade has picked up immensely when tariffs are lower, and the world GDP was higher compared to when tariffs are increased because countries are more willing to trade. I think they’re still benefits to be gained from trade even when a global recession may be taking place. If tariffs are increased, countries might try to specialize in goods where they don’t have a comparative advantage in. Instead of trading for that good, they will try to produce it domestically. The opportunity cost of choosing to specialize in a good when they don’t have comparative advantage is using those resources elsewhere. Perhaps for producing a good they do have comparative advantage in. Also a decline in trade because of rising tariffs means firms wouldn’t be able to benefit from economies of scale.

Using the concepts of absolute and comparative advantage answer the questions.

1) Why does the U.S. trade goods with other countries that they can produce themselves? Wouldn't the U.S. be better off producing the goods themselves?

2) In your opinion, has the U.S. outsourced too much? Explain why you believe that the U.S. has or has not outsourced too much keeping in mind the reasons why corporations outsource, and the benefits derived from this strategy.

Please review the following resources when forming your opinion; you are free to do as much research as you want however your opinion should be based on data and not assumptions!

For example, just because your cousin lost his job because it was sent overseas doesn't necessarily mean that there was an overall negative economic impact.

- Economics of Outsourcing Policy http://www.plu.edu/~econ331/home.html The Case for Outsourcing Jobs http://money.cnn.com/2012/09/14/news/economy/outsourcing-jobs/index.html

- Outsourcing for Dummies (and the Willfully Ignorant) http://www.forbes.com/sites/danikenson/2012/07/11/outsourcing-for-dummies-including-the-willfully-ignorant/#39516eaa6821 US Manufacturers

- Have Three Million Available Jobs To Fill http://www.infowars.com/us-manufacturers-have-three-million-available-jobs-to-fill/

- U.S. Trade: Exports and Imports Decline Sharply in January 2009 http://www.calculatedriskblog.com/2009/03/us-trade-exports-and-imports-decline.html

Please take a look at how imports and exports mirror each other.

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