1. 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

2. 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?

3. 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

4. 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?

5. 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?

6. 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

7. 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

8. 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