Book Factory: Book = 8 pages + 1 title + page numbers + paper clip EE #13: Specialization Book Factory: Book = 8 pages + 1 title + page numbers + paper clip Round # Group’s Total Class Total 1 2 3

Debriefing Describe your role in the factory. Which round was your team’s most productive? Why? What could your team have done differently to be more efficient? If this was your fulltime job, would you have any loyalty to the factory? Explain. How could you get promoted at this job?

To use our resources efficiently… We specialize: become experts in 1 area / activity Gain an absolute advantage: able to do / make something using fewer resources than others

For example - Ernie mows lawn in 30 mins & washes dishes in 40 mins Bert mows lawn in 45 mins & washes dishes in 35 mins Who has the absolute advantage in mowing the lawn? Who does for washing dishes?

Does this make economic sense? Lawyer types 60 wpm, but hires a secretary who types only 45 wpm. Who has the absolute advantage in typing? So, why would the lawyer hire a secretary?

Comparative Advantage Lowest opportunity cost of producing an output should specialize in that It’s more efficient to have a secretary type at $20/hour versus a lawyer who has more skills / knowledge

Thus, ppl exchange their skills / services Barter: direct exchange for products Trade you my loaf of bread for your jar of jam Money: payment for work

It all leads to… Division of labor: each worker specializes in a small # of tasks (more efficient) Car factory: each person only completes 1 small part of the car Benefits: Produce more Each person is best used according to their skills / abilities Expertise in an area