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Standard Address

Standard Address. 2.3 - Objectives. 12.1 Students understand common terms & concepts and economics reasoning. Explain the law of comparative advantage. Understand the gains from specialization and exchange. A BULLDOG ALWAYS. Commitment. Attitude. CARES. Respect. Encouragement. Safety.

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Standard Address

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  1. Standard Address 2.3 - Objectives 12.1 Students understand common terms & concepts and economics reasoning. • Explain the law of comparative advantage. • Understand the gains from specialization and exchange.

  2. A BULLDOG ALWAYS Commitment Attitude CARES Respect Encouragement Safety

  3. Key Terms LESSON 2.3Comparative Advantage law of comparative advantage absolute advantage specialization barter money division of labor CONTEMPORARY ECONOMICS: LESSON 2.3

  4. Comparative Advantage • What are you good at? • What are you best at? CONTEMPORARY ECONOMICS: LESSON 2.3

  5. Absolute advantage • Absolute advantage - to be able to make something using fewer resources than other production requires. CONTEMPORARY ECONOMICS: LESSON 2.3

  6. The Law of Comparative Advantage • The Law of Comparative Advantage - the worker with the lower opportunity cost of producing a particular output should specialize in that output. • Specialization occurs when industrial workers focus on single tasks, enabling each one to be more efficient and productive. CONTEMPORARY ECONOMICS: LESSON 2.3

  7. Comparative Advantage and Specialization CONTEMPORARY ECONOMICS: LESSON 2.3

  8. Would you help David? CONTEMPORARY ECONOMICS: LESSON 2.3

  9. The Law of Comparative Advantage CONTEMPORARY ECONOMICS: LESSON 2.3

  10. The Law of Comparative Advantage CONTEMPORARY ECONOMICS: LESSON 2.3

  11. Gains from specialization • Gains from specialization • Absolute advantage • Focuses on which of you uses the fewest resources • Law of comparative advantage • Focuses on what else those resources could have produced – that is, on the opportunity cost of those resources. CONTEMPORARY ECONOMICS: LESSON 2.3

  12. Exchange • Exchange • Barter – works best in simple economies where there is little specialization and few types of goods to trade. • For economies with greater specialization, money plays an important role in facilitating exchange. • Money – coins, bills, and checks – serve as a medium of exchange CONTEMPORARY ECONOMICS: LESSON 2.3

  13. Wider application • Wider application • Due to such factors as: • climate, • an abundance of labor, • workforce skills, • natural resources, • and capital stock, • certain parts of the country and certain parts of the world have comparative advantage in producing particular goods. CONTEMPORARY ECONOMICS: LESSON 2.3

  14. CHECKPOINT: Page 53 Comparative Advantage What is the law of comparative advantage? The law of comparative advantage says the worker with the lower opportunity cost of producing a particular output (task/job) should specialize in that output. CONTEMPORARY ECONOMICS: LESSON 2.2

  15. Specialization • Specialization -is based on comparative advantage, most people consume little of what they produce and produce little of what they consume. CONTEMPORARY ECONOMICS: LESSON 2.3

  16. Division of labor • Division of labor - An action that sorts the production process into separate tasks to be carried out by separate workers CONTEMPORARY ECONOMICS: LESSON 2.3

  17. Division of labor • Drawback of specialization • People are no longer self-sufficient as past generations CONTEMPORARY ECONOMICS: LESSON 2.3

  18. CHECKPOINT: Page 54 Specialization What are the gains from specialization and exchange? The gains from specialization and exchange are that everyone’s time and resources are being allocated most efficiently. CONTEMPORARY ECONOMICS: LESSON 2.2

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