• • Attempting to produce everything you want to consume yourself limits both your production and consumption possibilities.
  • To specialize, you must figure out what you “do best.” Economists define “best” as that which you produce at the lowest opportunity cost.
  • “Trading for the rest” by “selling” the goods or services you can produce at low opportunity costs and then “buying” things you would produce at a high opportunity cost requires division of labor.
  • Specialization and trading goods and services with others can help everyone. Trading can also provide the incentive to ease social and political tension among people and nations.
  • As long as the trade is voluntary, both parties can expect to be made better off, but not necessarily in equal measure.
  • Whether person-to-person or nation-to-nation, trade expands the range of choices available to the trading partners.
  • Trade has greater benefits when transactions are transparent.
  • The power relationship between the two trading partners affects perceptions of the value of gains from trade. Some examples of unequal trading relationships are parent/child, employer (or manager)/employee, or teacher/student.
  
  15 Minute lessons that can help illustrate this concept:

The Scarecrow's Hat: Trading Up to Reach Your Goal