CHAPTER 4 Gains from Trade SPECIALIZATION Specialization Levels

CHAPTER 4 Gains from Trade

SPECIALIZATION Specialization: _________________________________ Levels of Specialization: an area’s level of specialization depends on its _____________. ▪ Areas with _________ are more specialized due to _____________ ▪ More rural areas are ______specialized due to ______________ Specialization improves productivity through _____________________. ▪ Division of labor: _____________ into different specialized jobs in order to ___________________________ ▪ Increases speed of production ▪ Improves quality of products Example: High School teachers ▪ Improves standard of living specialize in their subjects

SPECIALIZATION ENCOURAGES TRADE Specializing in one good or service increases the need for other goods and services since no one is producing everything they need for themselves. THUS: ▪ Specialization; ________________________________________________________they obtain these things by trading their goods/services for other goods/services Money_______________________.

TRADE CREATES ECONOMIC INTERDEPENDENCE Economic interdependence: __________________ or countries to _________ the goods or services __________ produce yourself. Countries must depend on each other because some lack the resources to produce certain goods or services Trade Barriers: ___________________ between peoples or nations and thus force self-sufficiency ▪ Ex: ________________ that force Americans to buy goods made in the U. S. A

GAINING FROM TRADE The Two Types of Advantages from Trade: ▪ Absolute Advantage: the ability to be _____________ in the production of a good or service ▪ Comparative Advantage: the ability to produce a product at a_________________________. ▪ Comparative Advantage 1 ▪ Capitalism, Comparative Advantage & Absolute Advantage

TRADE MAKES US WEALTHIER 3 Ways Trade Improves Wealth: ▪ __________________________________ ▪ Not really talking about price ▪ ________________________ ▪ Millions of choices for burgers, Chinese food, frozen yogurt, auto insurance, etc. , ▪ _________________________ ▪ Opens up markets to less costly goods ▪ Opens up opportunities to _____________which is a ______ production method

THE NEGATIVE SIDE TO TRADE (BUT NOT REALLY) Having better comparative advantage ____________________. People lose jobs This is why some people _________ trade can force people to __________ which _____ makes them ___________.