1. ~Warm Up~ What are 3 benefits of a mixed economic system???

2. Some of the benefits of a mixed economy are:  Offers consumers the freedom to choose from a variety  Gov’t can redistribute $$$ to those in need  Eliminate inefficiency if people get to keep what they earn

3. I LOVE LUCY…  http://www.youtube.com/watch?v=GLp7Y 4TxXSA&feature=related

4. SPECIALIZATION  Let’s read this together…  On a separate sheet of paper, title it “Specialization” and answer the following 4 questions!

5. QUESTIONS  Where does Lucy and Ethel get a job at?  What does the company specialize in?  In the second clip, what type of machine does the company use to create the product?  What is Lucy's and Ethel's new task?  How do they solve the problem when production speeds up?

6. Specialization 1.What is specialization? 2.Why do you think Miss Varee shifted from a multi- toy company to a specialized doll making company? Why would that be beneficial for her? 3.How might employees feel about this change? What are the benefits and costs of employees being told to only make one product and one produce alone. 4.How might what you learned in this story be applied to an international/global scale? How do you think countries should operate???

7. What is specialization?  Specialization means to concentrate your resources and energy into making a few items, rather than a variety of items.

8. Adam Smith & The Pin Story When he first observed the factory, he noticed that each worker was producing his or her own pins. By the end of the day, the total production by the workers was 2,000 pins. He stated that each worker should specialize in the production stage rather than produce his or her own pins. Through specialization, the total output by the factory increased to 20,000 pins per day.

9. Where do we see Specialization? I am going to prove that specialization actually works. On a scratch sheet of paper, write down what you think each state is known for.  Idaho  Florida  Texas  Michigan  Nevada

10. Trivia Question  Why don’t we grow oranges in Alaska?  Can you grow oranges in Alaska?  Why are oranges grown mostly in Florida & California?

11. Why do you think Miss Varee shifted from a multi-toy company to a specialized doll making company? Why would that be beneficial for her?  Could lead to improved sales and efficiency if you concentrate on what your company is best suited for.

12. How might employees feel about this change? What are the benefits and costs of employees being told to only make one product and one produce alone.  Employees might be bored at the idea of doing the same thing over and over again. Gets repetitive.  Benefit-employees get good at their jobs since it is broken down to simpler tasks

13. How might what you learned in this story be applied to an international/global scale? How do you think countries should operate???  In the same way, countries shouldn’t try to produce everything for its citizens. Rather, like the example with the toy company, countries should use their limited resources to SPECIALIZE in what the country is best suited for. And then, it can trade with other nations for other goods.

14. Three Aspects of Specialization: 1. Economic Advantages  Workers get good at their jobs  Less time wasted shifting from one job to another  Specialized capital can be developed 2. Trade or Exchange  Useful only if there’s a demand for your specialty  Could trade or barter (but is time consuming and inefficient)  Therefore, money usually facilitates exchange 3. Alienation  Can lead to boredom and low morale

15. Economic specialization leads to… 1.) EFFICIENCY 2.) HIGHER STANDARD OF LIVING

16. Evolution of the Market Economy pg. 24 1. Division of Labor (people have specific tasks…think of the assembly line) 2. Leads to Specialization (really good at one or a few products) 3. Wants to become an expert in your good, so you develop specialized capital (good technology/tools) 4. Leads to efficiency 5. Allocate your resources (sell your goods) 6. Leads to PROFIT!!!

17. Directions: Create a comic strip that illustrates the evolution of the market economy. 1. Division of Labor2. Specialization3. Specialized Capital 4. Efficiency5. Allocate Resources 6. Profit

18. H.W. Section 2.3 Comparative Advantage  Read pages 50-54  Define Key Terms in your Notes: Absolute Advantage Law of Comparative Advantage Specialization Barter Money Division of Labor  Answer questions 1-4 on a separate sheet of paper.

19. 1. Why does specialization require people to complete exchanges?  Specializing in one product forces people to trade that product for other goods they do not produce.

20. 2. How does money help people complete exchanges?  Money is a medium of exchange that people are wiling to accept in return for goods that they own or produce. Without money, people will have to rely on trading, which could be time consuming and inefficient.

21. 3. How is a division of labor accomplished?  Division of labor sorts the production process into separate steps, each of which is carried out by different workers. Through repetition and practice, each worker becomes better at his or her assigned task.

22. 4. What advantages may be offered by division of labor in addition to allow workers to become more accomplished at the tasks they completed?  Division of labor allows the introduction of labor saving machinery to production.

23. Warm-Up  In your own words, define specialization.  Pick 3 things that you own and look at the tag.  Write down what country the product is made in.  Example:Miss Varee’s jade bracelet—China

24. Trading Between Countries United StatesSouth Korea PCs DVDs 40 80

25. United States South Korea  Equation of Exchange: AA in PCs: AA in DVDs: CA in PCs: CA in DVDs:

26. Terms of Trade: 1. no nation will trade unless it gains from that grade 2. the terms of trade must fall between the domestic exchange equation  AA in PCs: U.S.  AA in DVDs: S.K.  CA in PCs: U.S.  CA in DVDs: S.K.  Terms of Trade:  U.S. will trade 1 ______ for more than ________ and less than _________.  South Korea will trade 1 ________ for more than _______ and less than __________.