Specialization and Division of Labor

Why are most countries better off specializing in the production of particular goods, and then trading with other nations to obtain whatever else they need? 

• Transportation costs are lower than they were a century ago.
• Resources are not evenly distributed among countries.
• Greater investment of capital goods increases productivity.
• People have limited resources to satisfy unlimited wants. 

Country X can manufacture a particular product better and at a lower cost than country Y can.
What conclusion can be drawn from this situation?

• Country X has solved the problem of scarcity.
• Country X should discontinue making that product.
• Country Y should try to produce the same product. 
• Country X should sell that product to Country Y.

Read the following two statements:
1. Nation A produces cars more efficiently than it can grow food crops.
2. Nation A produces cars and buys food from Nation B.
What principle of economics is illustrated by these two statements?

• Laws of Supply and Demand
• Scarcity
• The Factors of Production
• Specialization

Countries benefit by specializing in the production of a limited number of goods.
How does this situation encourage trade among countries?

• Since a country cannot produce all of its needs, it makes sense for it to specialize in what it can produce efficiently, then trade with another country that specializes in what it needs.
• It does not encourage trade because all countries can produce whatever they want.
• Countries have unlimited resources so they don't need to specialize.
• Because Mr. Randa and Mr. Tonkli said so!

When an individual specializes to produce one good, and then acquires additional desired goods from other specialists,

• both parties gain as a result of voluntary exchange.

• both parties gain as a result of fraudulent exchange.

• neither party gains as specialization decreases efficiency.

• neither party gains as specialization decreases productivity.

Joseph is a teacher. He also enjoys working on automobiles. Recently, Joseph has been so busy at his teaching job that he has had no time to work on his car. He decided to pay his friend, Larry, to do some vehicle maintenance for him.

What is this type of economic transaction known as?

• Specialization

• Interdependence

• Marginal Analysis

• Voluntary Exchange

Kathy, Sue, and Christina own a bakery. Each day all three women spend hours baking cakes, decorating cakes, and packaging cakes. Which economic concept would help them become more efficient?

• Scarcity

• Productivity

• Specialization

• Interdependence

In markets both parties are better off when they engage in voluntary, non-fraudulent exchange. What is the role of government in promoting such exchange?

• There is no role for the government; the government only impedes exchange.

• The governments role is to create legislation to prevent fraud.

• The role of government is to make sure all individuals are treated equally.

• The governments role is to make sure sellers make a profit and stay in business.

If two people are packing and delivering food, what is the most efficient way to do the job?

• Both people pack and deliver as a team.

• One person packs all the orders and the other delivers them.

• One person packs on Monday while the other delivers and then they switch jobs.

• One person packs half and delivers them; then the other packs the other half and delivers them.

Ryan tells Ty that he will give him his best Pokemon card in exchange for Ty's autographed baseball card. Ty feels this is a fair trade. However, when Ryan trades with Ty, Ryan gives him his second best Pokemon card instead.

Why was this trade not beneficial for both parties?

• Ryan lied about what he was giving to Ty.

• Ty lied about what he was giving to Ryan.

• Baseball Cards are worth more than Pokemon Cards.

• Pokemon Cards are worth more than Baseball cards.