Lesson 4 Vocab

Question 1

Specialization

Answer 1

The development of skills or knowledge in one aspect of a job or field of interest. People who specialize become experts in a particular activity.

Question 2

Division of Labor

Answer 2

The allocation of separate tasks to different people. Division of labor in the production of a good or service is based on the principle of specialization.

Question 3

Voluntary Exchange

Answer 3

The act of willingly trading one item or service for another. Both parties in a voluntary exchange expect to gain from it.

Question 4

Barter

Answer 4

The direct exchange of goods or services without the use of money.

Question 5

Money

Answer 5

A generally accepted medium of exchange that can be traded for goods and services or used to pay debts.

Question 6

Economic Interdependence

Answer 6

The characteristics of society in which people rely on others for most of the goods and services they want. A result of specialization and trade.

Question 7

Absolute Advantage

Answer 7

The condition that exists when someone can produce a good or service using fewer resources than someone else.

Question 8

Comparative Advantage

Answer 8

The condition that exists when someone can produce a good or service at a lower opportunity cost than someone else.