Introduction: The purpose of this activity is to reflect on the principle of comparative advantage and
better understand how the patterns of global trade are shaped by this
fundamental concept. You will watch and read the story of a t-shirt that
was manufactured using resources from four separate countries. Next,
you will respond to an essay prompt.
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Steps:
- Read the page that tells the backstory to the Planet Money t-shirt project.
- Watch the five part documentary
- Read the stories behind the t-shirt’s different stages of production:
Essay prompt:
A comparative advantage exists when a particular task can be done or a good can be produced at a lower opportunity cost by one nation than by a potential trading partner. When countries specialize in the goods for which they have a comparative advantage, the allocation of resources (land, labor and capital) between nations is more efficient, allowing for a greater level of overall production and income than what is possible without trade.Carefully explain how the the story of the production of the Planet Money t-shirt demonstrates the principle of comparative advantage.
57 comments:
A comparative advantage is a lower relative or comparative cost than that of another producer. As shown by the Plant Monkey t-shirt documentary, major corporations enjoy a major comparative advantage due to countries like Bangladesh. Bangladesh is notorious for its overwhelming population which leads to a cheap labor force and the lowest minimum wage rates. As of Dec.1,2013 Bangladesh has $68 as the monthly minimum wage;thus,the cost of labor in America is placed in stark contrast. Compared to this low rate, American labor force costs are outrageous especially if plans to raise the minimum wage past $10 follows through.Hence, Bangladesh's government takes advantage of its poverty-stricken and abundant population to attract major corporations.As a result, its by far easier for American companies to export raw materials to be developed in poorer countries for a much cheaper cost in order to yield bigger supplies and profits.
Gabriel Camera
4th period
The reason a single shirt is moved through different continents to be completed is to make more profit. Why would a company pay a worker $7.25 per hour here in the United States when they can pay the worker $2.30 per hour in Bangladesh? Plant Monkey t-shirt uses that advantage to make more money. That is why you rarely see a shirt made in the United States. If you haven't noticed, the countries with the biggest population have the lowest minimum wage for workers. Watching that documentary and following the shirts from Plant Monkey t-shirt was very interesting and I learned a lot. Each country in the video has an advantage of something and are specialized in that one thing. The United States growing the cotton. Bangladesh's cheap, but hard workers. And Colombia style and cheap transportation to the United States.
Kaylah Moore
Period 1
The documentary follows the creation of an ordinary T-shirt. The first step of T-shirt creation began right here in America, on a Mississippi cotton farm; this is where advanced technology is used to get the most cotton with the least amount of sweat: to harvest over 9.4 million T-shirts in one year it takes 13 people. The cotton is woven into yarn using complex machinery. The consistency of the yarn and how tightly it is woven determines how soft it is: the softer it is, the looser it is when woven. The yarn is woven into shirts by factory workers. In Columbia, being a factory worker is a stepping stone; Columbian factory workers see light in other career paths. Meanwhile, in Bangladesh, being a factory worker is the only source of light that most Bangladesh women may see. In Bangladesh, women are considered a burden, as they may cost their family a huge amount of money, putting their family in debt; in the end to bring their family out of poverty, these women work in factories, even if for lower wages. Compared to the actual price of just one shirt, the cost to ship a shirt is very minute. Compared to older ways of shipping, modern ways are much less difficult. There are many people involve in the shirt making process, from those who engineer seeds to grow cotton, to those who sew to pay off their family’s debt. In terms of comparative advantage, factory workers of Bangladesh are taken advantage of in their situation: they are more desperate for funds, therefore anything that may put food on the table sounds great to them.
The varying countries whereby each level of production occurs is evidence of comparative advantage's existence in the global economy. Why go to the trouble of shipping from nation to nation if it's possible to do it all at one location? Because of the opportunity cost. United States is the leading exporter of cotton because of their innovations in technology, methods, and science. With automated machines, advanced specifications testings, and genetic modifications, United States produces cotton with amazing efficiency. That's why foreign nations choose to buy cotton from America, because the specialization in America has dropped the price low enough that it becomes more profitable to import it rather than beat it. Likewise, the factories in Colombia and Bangladesh can supply workers at great abundance at a very low wage. Thus, labor tends to be outsourced to countries such as these, solely because of the comparative advantage.
Kristal Pinto
Period 4
The Planet Money T-Shirt production process first began by shortlisting a select group of nations that specialized in specific functions respectively in the production process. These countries are United States for its cotton, Indonesia for its yarn, Bangladesh for the production of fabric and Colombia for manufacturing of the fabric into t-shirts. Comparative advantage is well recognized by planet money t-shirts, because the selected countries have their own strengths that planet money t-shirts is able to fully utilize to produce a low cost high quality t shirt, to stay competitive in the t-shirt industry. United States is the highest producer of cotton in the world, Bangladesh has the cheapest labor costs and Columbia offers the advantage of North American Free Trade Agreement(NAFTA)which keeps tariffs lower while giving companies the advantage of quality labor at a cheaper price.
Seth Jokinen
4th period
The comparative advantage in the process of making the t-shirt can be seen as each of the countries involved use their strengths to ensure the cheapest production method for each individual shirt. The U.s. has lots of capital goods that allows us to collect natural resources at a rate much quicker than any other country. However, we do not have as cheap labor as in Bangladesh or Columbia. Thus if the U.S. and the other countries specialize (Capital for U.S. and Human resources for the other two countries), we can produce more product with fewer resources and thus the world now has more t-shirts than we could if we kept an isolationist state of mind.
Jennifer Shen--- 1st period
A comparative advantage is that one nation can produce a particular good at a lower opportunity cost than another nation with which it compared. The production of the Planet Money T-shirt is just an ordinary T-shirt we normally wear. However, we probably never considered that how the T-shirts make. In the United States, great technologies make farms produce much more and much greater cotton. Also, a cotton buyer in other country can order a bale of U.S. cotton which can be guaranteed to match the exact specifications like exact color, exact length, exact fineness every time. The U.S. exports more cotton than any other country in the world due to the comparative advantage. Then, Indonesians use complex machine to get these cotton woven. Interestingly, these machines used today in Indonesia or Bangladesh were used in U.S. in early 1900s. A comparative advantage can also apply in poor countries such as Bangladesh. Most women workers earn the minimum wage which is only $68 per month due to the large population in Bangladesh. However, the large population can also be considered as their comparative advantage. They have more labors to make these fantastic T-shirts. Women have no choice but working in garment factories in order to make live. The modern ways of shipping make the process much easier and benefit us by reducing the price the t-shirts actual cost.
Period 4
Comparative advantage refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another. Even if one country is more efficient in the production of all goods than the other, both countries will still gain by trading with each other, as long as they have different relative efficiency. In the documentary, we learn about the impact that tariffs had on the production of the Planet Money t-shirt. The men’s shirt was made in Bangladesh, while the women’s was made in Colombia. We also learned that the Colombian textile worker earn about 3 times as much as the Bangladeshi workers. The Colombian workers, despite being paid three times the monthly wage that Bangladeshis are making, are 7 times more productive. Increased productivity is the result of the integration of better or more technology and better training or education among workers. In a low-skilled manufacturing industry like garments, the greater productivity is almost certainly due to greater access to technology in Colombia than in Bangladesh.
Akshay Thakor
4th
The story of planet money t-shirt demonstrates comparative advantage by showing us how big corporations have the bigger advantage out of this. it is very beneficial for them to send raw goods (cotton) over to other industries in which goods can be produced cheaper. The next steps shows us the use of machine. Even though machines cost are heavy at first, after producing so much after some time, the positives over weigh the negatives. having machines reduce having to pay people wages, which also helps reduce pay for insurance if provided. The next step was people. The only reason why they have people making cloths is because its to advanced for machines to make it, that's when cheap labor like Bangladesh plays an important roll, to keep costs low and profits high. The last was boxes. this may seem like a joke but it isnt however. Boxes travel all sorts of goods from point a to b to c and so on and so forth. These boxes carry such large quantity of stuff that its a very effective tool for getting cheap and a large quantity of items around, again, to minimize extra costs and more profit.
Katie Snyder-prd 3
The Planet Monkey T-shirt production follows one of the best examples, exemplifying the idea of comparative advantage. This production allows multiple countries and people to benefit economically from the production. The shirts become cheaper for the consumers, and the specialization of production stimulates the economy is the participating countries. After watching the documentaries, I know that comparative advantages exist and that they are good for the world as a whole market.
Alexander Pappan
4th Period
The production do the planet money t shirt is great example of the comparative advantage idea because it depicts how each country can use whatever has the least opportunity cost, to specialize in what they can do the best in order to make the shirt. Comparative advantage allows each nation to successfully use all their resources in the most efficient way they can to make the t shirt.
You can see that Planet Money T-shirts were designed entirely to highlight the process of making a tee shirt. They followed their product everywhere. They witnessed that hardships that people work through, and the ways that technology has helped. However, they also show that by using different countries, a company can be much more profitable. They said it is cheaper to have shirts sewn in Bangladesh, and Columbia simply because these people are willing to work for less. They can more cheaply and efficiently make the shirts, so Bam! They have the job. Where as the United states with its GM cotton can more effectively and cheaply grow cotton to be wound into yarn. This allows them to take that job. These two examples alone show how a comparative advantage can create jobs, and also benefit the producer with cheap manufacturing. However, it also benefits the consumer because lower production costs means lower prices. Following the cotton through the U.S. shows how technology can help to create comparative advantages. Also for the humor aspect, they called most Americans fat.
Tyler Morris
1st period
Matthew Francis
period #3
The reason for the video is to help show one of the advantages of the world economy- comparative advantage. Comparative advantage is when one country has the ability to create a product at a lower price than the country that will probably buy said product. First, the United States is more specialized than the other countries mentioned in the video in the production of cotton, so many people buy American due to the quality and efficiency. This cotton is spun into yarn machines in a different country such as Indonesia, which can use the machines in greater efficiency due to the country specializing in that specify skill. Then, comes the key- labor. In populous countries such as Bangalore there is a high demand of jobs, but there are more people to fill in those jobs, so the wages the workers earn is quite bare in comparison to the average American. So, in order to create cheap products, raw resources must be sent to cheap processing centers where they turn into workable goods. Once they turn into workablegoods, they are shopped to another ccountry that can offer labor or machines that cheaply transform the workable good into the final product. Some businesses also recognize the greatness of some trade agreement such as NAFTA. Taking advantage of NAFTA, businesses send the final product to a cheaper country and then send it to the final destination in order to avoid tariffs and other trade restrictions.
Overall, the videos show how amazing global trade is. When all the countries in the world work together to have the greatest comparative advantage, amazing things like this happen. When certain countries have a greater comparative advantage, we get things like shipping costs being only $.07. However, we see the negative spotlight in that when countries like Bangladesh and China charge dirt cheap prices for things, the people who work to create the products are hurt massively by having low income. However, taking advantage of producing things in different countries because they are cheaper allows us to have cheaper imported goods. If we were to keep this shirt in america and make it made only in america, we may not get dirt cheap shipping or the massive amounts of cotton that we want need to produce our shirt. With global trade, comparative advantage is possible
The purpose of the Planet Money t-shirt was specifically used to search for different manufacturers in the world that would be able to create the shirt. There were four: cotton in the United States that was sent to Indonesia to form yarn (thread) with their machines, which then dispatched to Bangladesh whom used the yarn to produce the fabric. The fabric transported then to Colombia where they did the last process- making the shirts. The product is then boxed, and brought back to the U.S to be bought. It is incredible what all we can produce when working along-side another, but one would think, why go through all that just to make a mass amount of one product? The reason being is we all have opportunity costs, the U.S could make the shirts but because of limited workers in the manufacturing business, not much would be produced. So who else but to ask another country that is willing to make the product because the cost of doing so does not affect them and as well is a great advantage to us because of price.
In order to explain the comparative advantage that is seen in the Planet Money T-shirts, we must break the production down to each of the four stages: Cotton, Machines, People, and Boxes.
Cotton: In the Planet Money T-shirt adventure, the United States supplies the cotton. In contrast to the other nations, the US has a huge comparative advantage in the cotton industry. This is primarily due to the high level of technology that is invested in our country. We are not afraid to use genetically modified cotton (constituting 90% of the total US cotton) and we have highly advanced cotton pickers that pickers that collect five times the cotton as that of a few years prior. In addition, the quality of out cotton is prime for industrial countries such as Indonesia who need fine cotton. The US government also gives farmers subsidies to boost crop growth and provide insure if their crops aren't plentiful. The biggest reason for our comparative advantage is our size in the cotton market of the world. The United States is the world's largest cotton producer. Other countries such as Bangladesh have too great a opportunity cost to produce cotton compared to the US. For this reason, the United States specializes in cotton and has a major comparative advantage in the industry.
Machines: Indonesia supplies the machines that spin the cotton into yarn, or thread, that forms the Planet Money T-shirts. Multiple reasons surround why Indonesia has a comparative advantage in yarn spinning. The primary reason is cheap labor. Due to the low wages that workers are given, the yarn industry can obtain more workers at a cheaper cost. However, if this were the only thing that Indonesia had, they would be like any other yarn spinning country. The additional benefit of Indonesia stems from their well educated populace, cheap, reliable electricity, and stable government. The government provides support for the industries and the cheap electricity and educated populace provide for larger production. At the moment, Indonesia holds a comparative advantage in the yarn industry over other countries. however, it won't be long until another country comes around with a more efficient use of their resources. Regardless, Indonesia's status holds firm and makes way for another step in the T-shirt production process.
People: Bangladesh brings forth the abundance of people and the extremely large textile force of the world. Bangladesh contains the largest textile exports in the world and thus has a huge comparative advantage. The lack of other opportunities in Bangladesh is the primary reason for the large industry. While Indonesia has a large labor force and dominance in yarn spinning, Bangladesh has a large textile force that will not disappear any time soon. The only issues with Bangladesh is the low wages that its workers receive. As time progresses however, the wages slowly increase to benefit the workers. Regardless, no other country exports as many garments as Bangladesh.
Boxes: Unlike the previous production steps, the transportation involved with this step follows a much wider scale. The transportation of boxes involves the whole world and links international trade together. Without the boxes, we wouldn't have nearly as many imports and exports as we have today. Colombia plays its role in the four country shirt production by making the women's shirts for Planet Money. The transportation however affects all four countries. Without the boxes, not nearly as many shirts, or resources for that matter, could be transported to each country. Unlike other comparative advantages, the transportation is equal among the countries.
Each of the specializations used by each of the four countries works to form a complete product; that of the Planet Money T-shirts. Without the comparative advantage each country has, production would be scattered and weakened. We see the most efficient use of the world's natural resources through the specialization of each countries industries.
Each country involved in making this ordinary T-shirt specialized in every what it contributed. The U.S. contributed cotton, Honduras, Columbia and Bangladesh modified the cotton to usable material, Columbia and Bangladesh created the shirts, and Columbia had them shipped over to the United States. So why does this shirt go all over the world? Why can't the whole item be manufactured here? The answer is money. The wages in these foreign countries is much lower than in the U.S., so it is cheaper for the T-shirt companies. Plus, the U.S. does not have many T-shirt manufacturing factories, it is not what we specialize in. Therefore it is necessary to invest in other nations. The factories do help the people working, by helping them earn their livelihood. However, are the workers in Bangladesh truly benefiting? The T-shirt money does help some of the workers, but it is very hazardous. One of the factories collapsed and killed 1,000+ workers. The government in Bangladesh does not seem to care. It is willing to exploit its workers to gain more money from other nations. The wages these workers get should rise, their working conditions should improve, they should get more benefits. But none of these will happen if the government does not start caring for its people. Even if the U.S. leaves Bangladesh, there probably will be another nation to take its place.
Period 4
The law of comparative advantage states that if a country specializes in a good they have a comparative advantage in, they will use their resources more efficiently. Planet Money, an American company's, production process, proves the principle of comparative advantage is efficient and can incorporate countries of vastly different circumstances. For example, the cotton that the Planet Money t-shirts are made of is produced in Mississippi. The cotton growing and picking process is very technological advanced in the U.S., so it is efficient. Because of this efficiency, the U.S. might have a lower opportunity cost for growing and picking cotton than other areas of the world. The yarn for the shirts was spun in Indonesia and the shirts themselves are made in both Columbia and Bangladesh. The boxes in which the shirts are shipped are also made in Columbia. The process of making the Planet Money t-shirt involves several countries, each of which specializes in a particular part of the process. The fact that making a simple t-shirt involves so many different and diverse countries proves that the principle of comparative advantage applies to the real world. Each country specializes in whatever process that will benefit it best. The process does benefit each country's economy and efficiently makes the shirts, proving the law of comparative advantage true.
Nicolas Alba
Period 3
Planet Money T-shirt is a perfect example of comparative advantage. At first, you would think it makes more sense in order for a t-shirt to be made in only one place. But (for a company at least) it is cheaper to have different processes in different countries. The United States is able to efficiently produce cotton with all the agricultural advancements that we have. But workers in Bangladesh provide cheap labor. All the countries involved use their particular strength in order to make clothing in the cheapest possible way for each country, while also being advantageous to all the participating countries who benefit from their particular strength in something.
Comparative Advantage refers a party's ability to produce a good at a lower opportunity cost than another party. Planet Money utilizes the basic concepts of comparative advantage in their t-shirt production by staging different levels of developing their t-shirts in countries where they are able to develop it with the least opportunity cost. For example, Planet Money makes the actual t-shirt in Bangladesh because they amount of money they pay the workers to make the t-shirts is very little. If Planet Money decided to make the t-shirts in the United States, the cost would be significantly higher since the minimum wage is also higher in the US compared to Bangladesh. By doing producing the t-shirts in Bangladesh, they are producing their t-shirts with the least opportunity cost. Bangladesh stages different levels of production in different countries because the amount of money they earn for the amount of labor done is maximized in these countries. Planet Money utilizes comparative advantage to develop their product in locations where it is cheapest.
Saimol Edaparampil
4th Period
The story of the production of the Planet Money t-shirt demonstrates the principles of comparative advantage as Planet Money tries to take advantage of the cheap costs of making and bringing back products from other countries. Moreover, this process seems to be reasonable although it is very sad to see how the workers have a poor lifestyle due to the unusually low minimum wage. Due to the poor lifestyle, American companies are able to make clothes at very low rates and, in result, make big profits for their companies.
A comparative advantage is producing something at a lower relative cost than another producer. In the videos it is clearly shown that certain goods can be produced cheaper in some places than in others. For example cotton can be produced at a cheaper price in the U.S., because we produce the most. We then export the cotton, because wages are lower in other countries, so it is more advantageous for us to outsource those jobs. The t-shirt was essentially split up into parts, and where those parts were produced depends on what costs the least.
The documentary on t-shirt production clearly emphasizes on the economic law of comparative advantage. Comparative advantage meaning the ability to produce products/services at a lower cost than compared to the ability of others and in turn, benefits both traders. In this documentary, it focuses mainly on the production of t-shirts in Bangladesh. It is comparative advantage for countries like Bangladesh to produce t-shirts because of lower wages and the amount of jobs offered to poor individuals in rural areas struggling for income. But wouldn't shipping costs be expensive and take away the advantage of cheap labor? No, thanks to cargo ships, millions of shirts are shipped at only a price of 0.17 cents. All in all, it the video shows the law of comparative advantage where Bangladesh is able to produce shirts at a lower cost and high capacity and it benefits us because of cheap shipping costs.
The story of this shirt demonstrates comparative advantage by showing that each country makes the shirt that can be made at their least opportunity cost. For Colombia its easy for them to make the women shirts at the lower price and they specialize in it so its what they make. In Bangladesh they make the men shirts because that's what they can afford. Since they do this every country that is included in the process gets some profit out of the shirt and its cheaper for us Americans to buy.
Comparative advantage is defined as the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.In the documentary for Planet Money, every step of the production of their t shirts represents this concept. In their first step of production, the cotton, which could be produced in numerous countries, is produced in the United States. This is due to the ability of American producers to genetically modify cotton seeds to resist pests and to produce more cotton than other plants. This allows for the cotton to have a lower opportunity cost in American than in another country such as Bangladesh. Furthermore, the machines that allow the cotton to be produced require fewer people thus allowing America to focus on other tasks as well. Secondly, the shirts are produced in Bangladesh and Columbia due to the lower wages that can be paid to the workers. This allows the shirts to be produced at a lower cost overall. In America, the minimum wage for producing the shirts is $7.25 an hour, however, in Bangladesh the amount is much lower. Even if one adds the transportation of raw materials to another country cost, the over all amount does not add up to the amount American would cost in labor prices. Overall, America has the comparative advantage of producing the cotton, but other countries such as Bangladesh and Columbia have the comparative advantage of producing the shirt.
Prerna Kamnani
Period 1
The Project T-Shirt Money is an organization that followed the production of the t-shirts that they were making. It exemplifies the concept of comparative advantage. To begin, the beginning of their production process commences with a cotton farm located in Mississippi. As stated in the video, America remains to the be top exporter of cotton in the world. Therefore, they gain the most profit off of their cotton production and have the comparative advantage. However, the next step was to spin the raw cotton where it was sent to Indonesia. Indonesia has the technology and the labor to do that in the most efficient way proving its comparative advantage. Moving down further in the production process, Bangladesh and Colombia have a comparative advantage with fabric factories. They have the resources and the labor to manufacture the t-shirts in comparison to the rest of the world. The labor in both countries works for the lowest wages in the world which is why they have the comparative advantage. Each country specializes in a certain task throughout the production process. Additionally, the product or good they specialize has the greatest comparative advangtage. David Ricardo’s principle of the comparative advantage is still prevalent in the world today.
The documentary provides the stages of a creation for a t-shirt. Comparative advantage is probably one of the best advantages a nation can have economically. This is basically when a country specialized in the production of a certain product. For cotton, it is mainly exported in the US due to the technology in Mississippi.For the machines, the cotton from US goes to countries like Indonesia and Bangladesh which is because they specialize in the machinery to make the cotton into a t-shirt material.material the people make the t-shirts in Columbia and Bangladesh which gets the designs. Although they both have similar roles, the productivity and lifestyle of the two different countries are very different. For boxes, Bangladesh and Columbia ship them back to US. This provides insight on how the transportation industry is one of the most important ones. In conclusion, this provides all the different roles different countries have and expresses the role of comparative advantage in great detail.
Sam Kadakia
period 1
Comparative advantage is what the video depicted. Such as, how the cotton is produced in the U.S. and the processing and manufacturing takes place in other parts of the world that specialize in these areas. For us to manufacture and process would be more costly than if another country, such as Bangladesh or Colombia would. In regards to the work force in Bangladesh and its low standard of living, it is much cheaper for the U.S. to employ their help instead of having our own clothing manufacturing company or companies. This is due to the higher minimum wage of the U.S. and better job choices. Also, despite how little the 68$ monthly minimum wage sounds or the accidents, such as the factory collapsing on workers, the people of Bangladesh need it. So what the Planet Money T-shirt documentary has shown me is a proper example of the comparative advantage principle.
The goal of comparative advantage is to maximize the output of society and also to allocate the resources in maximum efficiency. As shown by Planet Money's campaign to unravel the open market system that they are using to make their t-shirts, the use of other nations to do work that some nations can do by themselves, as determined by absolute advantage, can be crucial to the economy and the lives of many in that particular society. People in Asia and in maquilladoras in mexico might seem as though they are getting underpaid for their work, but it is definitely an improvement in living conditions compared to without. Not only are MDC's economically benefiting from getting lower priced labor for their products, but the use of comparative advantage benefits every affected across the board.
Caleb McLeod:
The goal of comparative advantage is for countries that can't produce all the things the better countries can, to be able to still have a Mitch in the economy. Planet Money is using this to create their T Shirts.
The mindset for moving a single product, in this case T-shirts, is in order to maximize profits. The ability many companies, such as planet monkey, have to pay workers in other countries less in order to make the same product, so in order for a company to make more money it is only logical for them to employ multi-continental production. The understood correlation between lower standard of living and population size infers that the countries with more people are going to have lower wages and have a cheaper labor force. From watching the documentary I learned that division of labor is on a global scale, each nation does what they do best for the best price and so on and so forth.
Tori Daniels
3rd Period
The journey of the process of the tshirt perfectly describes the potential of comparative advantage and how it works. The t-shirts start as cotton that is grown and picked straight here from the United States. We have the "advantage" of growing cotton over other countries because our technology for growing and picking the cotton makes it the cheapest. Next, the cotton is shipped to countries like Indonesia where the cotton is made into yarn (thread). It is the most efficient way of producing yarn because the machines take over the labor force and they make the process fast and cheap. After the yarn is turned into the fabric of the shirt, the next steps of the process are in Columbia and Indonesia where the shirts are sewn together. This part of the process is key, because the cost of labor to produce the shirts is extremely low compared to what people may be payed in the United States. One woman in Indonesia was being payed just 80 dollars a month by working 6 days a week. Yet, the job opportunities these t-shirts provide help keep many people in the poverty stricken country afloat. The production of the shirt provides hundred of jobs. Next, the shirts are shipped back to the US, where the production line ends and the shirts are sold. The different steps in production lead the shirt to be made in the most efficient and cheap way. This is done by staging the production in countries where they have a comparative advantage over others, or where it can be produces at the fastest and cheapest rate.
It makes sense for a country to create something that takes less time and costs less to make. This concept is called comparative advantage where countries specialize in goods for which they can produce at low opportunity costs.
The production of Planet Money t-shirt exemplifies the principle of comparative advantage. Because America has the technology to create high quality, genetically modified, pesticide resistant cotton at a low cost labor wise (it takes less people to operate a machine), they can specialize in growing said cotton. Men's shirts, on the other hand were created in the factories of Indonesia and Bangladesh because they had the lowest opportunity costs in terms of labor. Their low wages
allowed for cheap labor yet educated workforce with cheap but reliable
electricity. They could specialize in making shirts at no expense to other resources. The same goes for columbia, who created the female shirts. Because Bangladesh has lower minimum wage than that of America, they have a comparative advantage in creating shirts.Thus resources are allocated efficiently.
The process of creating the t-shirt begins with the cotton farms where the owners and workers work to grow and pick cotton. The man who owned the farm had formulated a genetic modifier allowing the cotton to grown faster and in greater abundance. Without the idea and formula for this genetic modifier, the cotton used to create the t-shirt might be obtained from a place where the farm was not as technologically advanced or had a suitable climate such as Bangladesh which would waste time. This would slow down production creating a greater opportunity cost. Then it goes to factories which have modern machines spinning and thinning millions of sheets of cotton every day. This is more efficient by allowing the factories that have the technology capable for the job to manufacture the cotton rather than doing it by hand elsewhere. Once the cotton transforms into yarn and is sent to factories, it seems as if the industries are organized and moving at a steady pace due to the abundance of individuals willing to work at such low wages. The woman in Bangladesh has been in the industry since she was young so must be an expert working at the factory and used to the wages although she dreams of earning more. Finally they are shipped to their respective places in the containers and on trains that run from specific places at certain times on a strict schedule. Allowing various nations and places to create a single t-shirt surprisingly saves time and allows these locations to specialize in their particular areas allowing for smoother and faster production without a large opportunity cost.
It is no surprise that even the creation of a single t-shirt requires the time, labor and consumption of different materials made in various continents. This way each country is proving the strong existence of the comparative advantage in it's own economy due to their ability to manufacture specific materials at a lower opportunity cost. The documentary carefully highlights the vital materials that are necessary starting out from cotton, the machines, the employees and transportation of the merchandise. As the documentary breaks down the process of creation of each material, it is evident that the production of cotton in United States is more efficient than in any other country due to the advanced technology that is available in order to grow vast amounts of cotton. Next this very same cotton is used in Countries like Columbia, Bangladesh and Indonesia where complex machinery transforms this cotton into yarn that can be further altered. The hardest part of the process begins when the materials are brought to the factories where female workers spend many hours toiling in order to sew the shirt. Furthermore,the product goes on get shipped and sold to the consumers. Therefore, the comparative advantage is clearly present t due to the fact that his whole event is a meticulously sought out process that requires very efficient machines, crops and hard labor from all over the world in order to be created.
Jessica Dove
3rd Period
The Planet Money t-shirt demonstrates comparative advantage because each country has a specific part of production they do best. Although the United States can grow cotton efficiently, Indonesia can spin the cotton and turn it into fabric a lot more efficiently than we can. This fabric then goes to Bangladesh because they have the most workers to sew these parts together. AFter all of this, Columbia can finally ship the t-shirts to America for a very small amount of money. Without all these different parts of production, the number of shirts Planet Money made for the price they sold them would not have been possible.
Anthony Chenevert
3rd Period
In economics, comparative advantage refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another. Even if one country is more efficient in the production of all goods (absolute advantage in all goods) than the other, both countries will still gain by trading with each other, as long as they have different relative efficiencies. For example, if, using machinery, a worker in one country can produce both shoes and shirts at 6 per hour, and a worker in a country with less machinery can produce either 2 shoes or 4 shirts in an hour, each country can gain from trade because their internal trade-offs between shoes and shirts are different. The less-efficient country has a comparative advantage in shirts, so it finds it more efficient to produce shirts and trade them to the more-efficient country for shoes. Without trade, its opportunity cost per shoe was 2 shirts; by trading, its cost per shoe can reduce to as low as 1 shirt depending on how much trade occurs (since the more-efficient country has a 1:1 trade-off). The more-efficient country has a comparative advantage in shoes, so it can gain in efficiency by moving some workers from shirt-production to shoe-production and trading some shoes for shirts. Without trade, its cost to make a shirt was 1 shoe; by trading, its cost per shirt can go as low as 1/2 shoe depending on how much trade occurs. The net benefits to each country are called the gains from trade.
Matt Louis
3rd
Its eye opening to see how our simple T-shirt can make such am impact on so many people. A short that cost us about $10 to purchase was made and shipped for less than $5. If that same shirt were to be made in the U.S. the price would be much higher due to the price of labor here. While we could possibly make the same amount of shirts or more, its not worth the price when it can be done just as efficient for a lot less.
Caleb Bledsoe - 3rd Period:
Each country that collectively contributed in the production of the Plant Monkey t-shirt demonstrated the principle of comparative advantage through means of advanced technology, human resources, and exporting goods by mass production at cheap costs. The USA is able to mass produce cotton expeditiously due to advanced technology that enhances the quality of the cotton by genetically modifying the cotton seeds used & the John Deere 7760 pickers also display our comparative advantage because they are able harvest cotton more quickly than any other country could and require little to no aide in fulfilling their jobs. Because Indonesia specializes in spinning, they're able to utilize their technology which spins much more quickly and efficiently than any other country around the world. Bangladesh's massive population of people cause the demand for employment to increase thus fulfilling the needs of physical labor/human resources for the textile industry. The mass shipment of t-shirts in the boxes from Colombia back to the USA serve as a benefit to us because we are able to physically attain the shirts at little to no costs.
Period 1
This documentary is a great example of how useful comparative advantage is in our lives. Something so simple, such as a t-shirt, has to go through such a tedious process to be produced, but the outcome increases efficiency. By allowing the U.S to provide the cotton, other countries can direct their resources into producing other greater quantities and better quality goods. Because the U.S has such technology, it is more efficient, effective, and reasonable for the U.S to contribute the cotton. Minimum wage in Bangladesh is much lower than that in the U.S, and Bangladesh also has a much larger population than the U.S does. Thus, it makes more sense for Bangladesh to contribute the labor force because the product will be finished more efficiently and effectively. Instead of having the U.S waste money on paying workers a higher minimum wage to put together the shirts, we can put that money saved into producing more cotton. Rather than having Bangladesh waste resources on producing cotton, it can do what it does best and focus on that in order to contribute more to the industry. It is all a matter of opportunity cost. Bangladesh would have to give up more to produce cotton than to have laborers put together the shirt. The U.S would have to give up more to hire workers at minimum wage than to grow and pick the cotton. By allowing both countries to specialize in what they can do more efficiently, comparative advantage decreases the amount of resources that we put to waste, thus increasing productivity and resourcefulness.
4th period
The documentary videos of Planet Money’s T-shirt demonstrate comparative advantage by showing that each country contributes to the creation and supplies of the shirt by their opportunity cost. It can be seen with the capital goods supplied by the cotton farms in the United States, to the spinning mill industries in Colombia and Bangladesh. The cotton farms within the United States are the better choice for multiple industries because of the cheap prices as well as the quantity it obtains. Same goes to the spinning factories in Colombia and Bangladesh. With small wages given to workers, both mills obtain more silk to be sewed, thus being the better option for companies who aim their priority for gaining more profits and cut spending.
Cortney Corley
4th Period
These documentaries follow the journey of a t shirt and explain why it takes many countries to produce a single product. It represents comparative advantage because it allows a t shirt to be made at different opportunity costs depending on the different countries. The multiple countries that it takes to make these products aids the entire global economy. This video also explains that it is cheaper and will not cost us as much if we have other nations create the given product. Therefore, their opportunity cost is lower and it allows America not to waste time on such a product. Different countries can provide different products and raw materials, and combined, the workload becomes easier. Different countries can provide the different steps in the process of creation, which ultimately saves money.
The cotton T-shirt is a great example of comparative advantage! America, having the technology, can engineer and grow the cotton. Then the cotton is shipped to Indonesia, who can weave the cotton together at a cheaper price. Then it taken to Bangladesh to make the T-shirts. Bangladesh has the advantage because since they are a much poorer country then we are, they are able to make the shirts cheaper then we are to make them here. Columbia is also cheaper, therefore, she also has the advantage. Because people are willing to work for lower cost in those countries, it is cheaper to make the T-shirts there.
Allen Jose
1st period
Comparative advantage enables us to produce a particular good or service at a lower marginal and opportunity cost over another. Even if a country is more efficient in the making of all goods than other countries. Both countries will still gain by trading with each other if they have different relative efficiency. The men’s shirt was made in Bangladesh, while the women’s was made in Colombia. It was also mentioned that the Colombian textile worker earn about 3 times as much as the Bangladeshi workers. The Colombian workers, despite being paid three times the monthly wage that Bangladeshis are making, are 7 times more productive. Better productivity is due to the better or more technology and better training the workers. In a low skilled manufacturing industry the greater productivity is almost certainly due to greater access to technology in Colombia than in Bangladesh.
Hamza Razaq
Period 4
A comparative advantage is when a country has less of an opportunity cost for the production of a product as compared to producing something else. This shows comparative advantage as each country has a job. Cotton is grown in the U.S., the cotton is shipped out to various countries to be turned into cloth, and then the clothes are made in either Columbia or Bangladesh to be turned into shirts. Each country has a comparative advantage for each stage of production. Each person in each country is paid accordingly to their job, and that country produces the most product in the shortest time with the most minimal cost needed. If some of the other jobs were done in the U.S. or Canada or elsewhere it may cost more than doing it in countries like Bangladesh or Columbia as there is more financial capital to be made by making the product over there. The story of the shirt is the story of profit. It is how the shirt travels the world in order to be made at the cheapest price possible, and sold at the price that creates the greatest profit for the company.
The cotton is grown in the U.S. because we have a comparative advantage in cotton due to government subsidies. The fabric and shirts are assembled in Bangladesh, Indonesia, and Colombia because those countries have a comparative advantage in textiles due to cheap labor and relatively stable government and infrastructure. Trade can exist among all four of these nations because of increased efficiency in the transportation industry. Specialization and trade are easier and more efficient than producing the t-shirts from scratch in one place.
Mohammad Abdel-Aziz
Period 3
This story demonstrates the principal of a comparative advantage because a comparative advantage is when one country can create a product at a lower opportunity cost than any other country. In the five part documentary we see that major corporations outsource to gain that comparative advantage and enjoy a larger profit. As we see in the documentary Bangladesh has one of the world's lowest wage rates in the world and a large population. These two things lead to a gold mine for large corporations. As a result of all of this American Corporations outsource more leading to less jobs for the American people.
Mansi Inamdar
1st period
With more technology and experience it's better to make t-shirts in places like Colombia since it's cheaper. It's better to produce products in a country that has better tools than to have it made in a easier working facility just because it's cheaper to do so
What allows us to create one product over some other alternative is by the comparative advantage of having a lesser opportunity cost for said product. Therefore, countries are able to specialize in in certain products, such as the United States and its ability to produce cotton or Bangladesh and its workers who are willing to sew for low pay, and allow these products to benefit other countries with a lower cost compared to another producer. Because of this idea, international trade can exist in a highly productive state as each country involved in the T- shirt will benefit from the trading of fabrics and labor.
Amita Batra
4th Period
Plant Monkey takes advantage of the relatively cheap labor in Bangladesh. If the company were to make t-shirts here, it would cost more money or less t-shirts would be made. However, with the efficient use of Bangladesh's labor, Plant Monkey is able to produce either more t-shirts or cheaper t-shirts. The profit margin for Plant Monkey's t-shirts automatically increases when the company utilizes Bangladesh's resource of labor. Both countries do what they do best, and as a result Plant Monkey has a comparative advantage. With Bangladesh's specialization in labor, the US is able to create a product that is manufactured at a lower price and thus, the margin of profit is inevitably higher.
This story demonstrates how true comparative advantage exist in daily lives. By taking advantage of the relatively cheap labor in Bangladesh, Planet Money is able to supply cheaper shirt while maximizing profits. If both countries d what they do best, then Planet Money has the comparative advantage by investing in Bangladesh's resource of labor. transportation has made trade more efficient thus increasing the product quality as well as low prices because of specialization.
Many people influence advantage through the area they live in. It may be cheaper to produce an item in one part of the world than another. Therefore the creation of that product should be made in the region where the advantage is much higher and more efficient. This creates a more profitable to the business than spending more money somewhere else.
The planet money t shirt perfectly illustrates the principle of comparative advantage. Bangladesh makes the t shirts not only better, but for less money, than a t shirt maker in the us. Many people refer to this practice as modern slavery because they pay the workers almost nothing to maximize their profits. So Bangladesh does what it does better than the United states and more money is made.
The principle of comparative advantage is when another country or person can produce a product at a lower opportunity cost. Through the money t-shirt we learn that it is made through no simple process and that it consists of the works of many different countries and people. The main example of comparative advantage is the very low opportunity cost for labor in Bangladesh and Colombia. The reason t-shirt companies go to Bangladesh and Colombia for labor is because of the low labor cost for the quantity produced. One can make many t-shirts for a much lower price rather than producing in their home country. Also, the cotton used to make the shirts come from different regions of the US because of the comparative advantage. Through the various locations of production the money t-shirt was made for the lowest opportunity cost due to the comparative advantage of each country.
I believe that students receiving payment for good grades is an extra push towards a great achievement. Although it may seem bizarre and ridiculous to pay a student to do well in school, money does provide great motivation for an individual and may lead to unexpected results in return. Not only does it reveal that they are capable of exceeding such expectations, but they will strive to continue and push themselves harder to succeed in live. Overall, I believe this is a great idea, but as well contains many flaws.
SAira Sultan pd. 3
considering that a comparative advantage is when you are efficiently producing something it is obvious that many companies with rather pay employees in bangladesh less than half of what they would have to pay american employees to work for them. we see this as wrong, however, they see it as their business profit.
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