1. CHAPTER 4
Gains from Trade

2. SPECIALIZATION
Specialization: _________________________________________________________________
Levels of Specialization: an area’s level of specialization depends on its _________________________.
Areas with __________________ are more specialized due to _________________________
More rural areas are ____________specialized due to ____________________________
Specialization improves productivity through _________________________________________.
Division of labor: _________________________ into different specialized jobs in order to
______________________________________________________
Increases speed of production
Improves quality of products
Improves standard of living
Example: High School teachers specialize in their subjects

3. SPECIALIZATION ENCOURAGES TRADE
Specializing in one good or service increases the need for other goods and services since no one is producing everything they need for themselves. THUS:
Specialization; __________________________________________________ ______________________________________________________________they obtain these things by trading their goods/services for other goods/services
Money______________________________________________.

4. TRADE CREATES ECONOMIC INTERDEPENDENCE
Economic interdependence: ____________________________________ or countries to _________________ the goods or services ____________________ produce yourself.
Countries must depend on each other because some lack the resources to produce certain goods or services
Trade Barriers: _____________________________________ between peoples or nations and thus force self-sufficiency
Ex: ________________________________ that force Americans to buy goods made in the U.S.A
Ex: Typical American breakfast

5. GAINING FROM TRADE The Two Types of Advantages from Trade:
Absolute Advantage: the ability to be _________________________ in the production of a good or service
Comparative Advantage: the ability to produce a product at a__________________________________________________.
Comparative Advantage 1
Capitalism, Comparative Advantage & Absolute Advantage
Not always better to be the best at everything

6. TRADE MAKES US WEALTHIER
3 Ways Trade Improves Wealth:
____________________________________________________________________
Not really talking about price
________________________________________________
Millions of choices for burgers, Chinese food, frozen yogurt, auto insurance, etc.,
__________________________________________________
Opens up markets to less costly goods
Opens up opportunities to _________________________which is a ____________ production method
Cheaper production costs means passing on those savings to the consumers by offering lower prices.

7. THE NEGATIVE SIDE TO TRADE (BUT NOT REALLY)
Having better comparative advantage _______________________________________.
People lose jobs
This is why some people _________________
_______________ trade can force people to ____________________ which _________ makes them ______________________.
If you’re making yourself more marketable…what does that mean you just increased?