The Gains From Specialization

Specialization

• Countries vary in the amount and variety of the factors of production they are able to use in producing goods and services.

• There are a variety of ways to produce a given product depending on the situation.

Cont…

• A nation (or region) which can find a combination of resources that is more efficient in producing a product than other regions has an advantage over other regions.

• The region with the advantage will likely find that its product is in greater demand and will be able to sell its surplus product and use that money to buy other products which it cannot produce as well.

• By engaging in this kind of specialization and trade, nations find that their standard of living is increased even though they are not doing any more work.

Saskatchewan

• What is Saskatchewan "well known for"

• Why?

Assignment

• Activity: Research Analysis • Divide the class into groups representing

the countries above and ask them to do an analysis of the economic advantage of the following regions:

• Canada, • Japan, • Costa Rica, • U.S.A., and • Saudi Arabia etc…

Discussion

• What would happen to the standard of living of these nations/regions if for some reason they could not trade and had to become self-sufficient?