Chapter 2 section 3 Absolute Advantage means being able to do something using fewer resources than other producers require. Law of comparative advantage, the worker with the lower opportunity cost of producing a particular output should specialize in that output. Specialization-occurs when individual workers focus on single tasks, enabling each one to be more efficient and productive.

Exchange Barter-a system of exchange in which products are traded directly for other products. Works in simple economy Money- coins, bills, and checks- serves as medium of exchange because it is the one thing that everyone is willing to accept in exchange for all goods and service.

Division of labor Division of labor – sorts the production process into separate workers. Each worker specializes in a separate task. It allows the group to produce much more. Owner – managers- assistant mangers- employees.