1. Microeconomics Where do markets come from?

2. Microeconomics Study of economic decisions and behavior of small units like people, families, businesses. How the interactions of buyers (consumers) and sellers (producers) in markets affects price.

3. Before there was markets. People made what they needed for themselves They were not affected by other people’s choices

4. Division of Labor The division of a complex procedure into small tasks, enabling workers to increase output through specialization. Which leads to more output than the producers themselves wish to consume They will want to trade their surplus

5. exchange Producers exchange for goods and services that they can not produce and are produced someplace else. Which leads to reduction in self-sufficiency Establishes markets

6. interdependence Decisions and events in one part of the world or a sector in an economy affect decisions in other parts of the world or other sectors in an economy. Loss of self-sufficiency makes us dependent on others and others on us

7. The division of labor starts markets because people need to trade for what they do not make Exchange makes them continue because people exchange their labor for money which they use to exchange for the goods and services that they continue to need Interdependence is the result because we are in the system of division of labor and exchange we are dependent upon other people and they are dependent on us.

8. Essay Question How does Leonard E. Read’s essay “I, Pencil…” illustrate division of labor, exchange, and interdependence?

9. Read “I, Pencil My Family Tree as told to Leonard E. Read. Write a five-paragraph essay responding to the following question. How does Leonard E. Read’s essay “I, Pencil My Family Tree” illustrate the working of the free market? In Class Plan Day One: Read Essay, take notes Day Two: Rough draft Day Three: Peer editing, and final draft

10. Nobel Prize Winner Milton Friedman Talks about the free markets