DEFINITIONS

There has been a sustained progression of humankind's wellbeing since the industrial revolution. This is measured by standards of living, child mortality, income per capita and a number of other useful statistics. This has come about as a result of specialization and trade.

Specialization (division of labor): a system of organizing the manufacture of an article in a series of separate specialized operations, each of whichis carried out by a different worker or group of workers. Simply put, having people do different parts of something and having it all come together in a faster and more efficient way than if everybody did all parts of something.

Trade: Essentially, to exchange (something) for something else, typically as a commercial transaction. Nowadays, this involves the buying and selling of goods.

Production possibilities frontier (PPF): A graph that shows the combination of two goods being produced. In addition, it illustrates the trade off between producing different quantities of these goods.

Absolute advantage: refers to the ability of a party (an individual, or firm, or country) to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

Comparative advantage: The ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.

	Created by 2015jtw almost 9 years ago

This is the second video on the crash course economics program. It's about specialization or division of labor and int'l trade and it's impacts on the world and people.

Specialization and Trade