Wednesday, September 15, 2010

Honors World History II: 16 September 2010


Current Events:

Imam Khamenei (from Iran) Message On Quran Desecration

Leader's message on Quran desecration

The message of the Leader of the Islamic Revolution to the Muslim Ummah following the abominable act of desecrating the Holy Quran in America:

In the Name of God, the All-Compassionate, the All-Merciful

"It is we who sent down the Koran, and we watch over it," says God the Mighty, the Wise [Holy Quran, 15:9]

Great Iranian nation, great Islamic Ummah!

The insane, revolting insult to the Holy Quran in America, an incident occurring under the security provided by the US police, is a major tragic event that cannot be considered merely as the foolish act of a few worthless mercenaries. This is a calculated act by those who since years ago have put Islamophobic and anti-Muslim policies on their agenda and have tried to combat Islam and the Quran in numerous ways by resorting to myriad propaganda means and campaigns. This is another link in a chain of shameless measures launched with the blasphemy of Salman Rushdi, the apostate, followed by the insult of the base Danish caricaturist, tens of anti-Islamic movies produced in Hollywood and now crowned by this disgusting show. Who and what is behind such evil acts?

Looking into this trend of evil, as manifested in recent years in atrocious operations in Afghanistan, Iraq, Palestine, Lebanon and Pakistan, leaves no doubt that it is designed and masterminded by heads of world imperialism and Zionist think tanks which have the highest degree of influence in the government, the military and security agencies of the United States as well as Britain and some other European countries. These are the ones at whom the finger of suspicion of independent truth-finding groups and individuals is pointed in the case of the attack on the Twin Towers on September the 11th. The then-president of the US, a criminal, was provided with the pretext to invade Iraq and Afghanistan; he declared a Crusade and, reportedly, said yesterday that with the Church entering the stage the Crusade has truly begun.

Full Text Available On:

Recorded September 15, 2010 at 0030bst

Section 1 The Scientific Revolution

Sixteenth-century Europeans began to question the scientific assumptions of the ancient authorities and to develop new theories about the universe. Nicholas Copernicus, Johannes Kepler, and Galileo Galilei revolutionized astronomy. Copernicus claimed that the sun, not the earth, was at the center of the universe—an idea considered heresy by the Catholic Church. Equally revolutionary were Isaac Newton's explanations of gravity and the movement of the planets. There were breakthroughs in medicine and chemistry, and numerous women contributed to the body of scientific research. The new view of the universe affected Western philosophy. The Frenchman Rene Descartes, the first rationalist, declared that matter could be independently investigated by reason. Francis Bacon, an English philosopher, developed the scientific method—a system for collecting and analyzing evidence.

Terms, People, and Places

The Copernican world view was now unassailable. After Brahe, Kepler, and Newton, our modern view of the universe is based on their ideas.

Johannes Kepler


Galileo Galilei, 1:17

Based on this video, what would you say was the relationship like of Galileo to the Church?

Francis Bacon

René Descartes

scientific method


Robert Boyle

Isaac Newton



In 1609, Italian astronomer Galileo Galilei heard of a new Dutch invention, the telescope. It was designed to help people see distant enemy ships. Galileo was interested for another reason—he wondered what would happen if he trained a telescope on the night sky. So he built his own telescope for this purpose. When he pointed it at the sky, he was amazed. The new telescope allowed him to see mountains on the moon, fiery spots on the sun, and four moons circling the planet Jupiter. “I did discover many particulars in Heaven that had been unseen and unheard of until this our age,” he later wrote.


Focus Question

How did discoveries in science lead to a new way of thinking for Europeans?

The Renaissance and the Reformation facilitated the breakdown of the medieval worldview. In the mid-1500s, a profound shift in scientific thinking brought about the final break with Europe’s medieval past. Called the Scientific Revolution, this movement pointed toward a future shaped by a new way of thinking about the physical universe. At the heart of the Scientific Revolution was the assumption that mathematical laws governed nature and the universe. The physical world, therefore, could be known, managed, and shaped by people.

Summary of the Scientific Revolution:

Until the mid-1500s, Europeans’ view of the universe was shaped by the theories of the ancient writers Ptolemy and Aristotle. More than 1,000 years before the Renaissance, they had taught that Earth was the center of the universe. Not only did this view seem to agree with common sense, it was accepted by the Church. In the 1500s and 1600s, however, people began to question this view.

Copernicus Challenges Ancient Astronomy

In 1543, Polish scholar Nicolaus Copernicus (koh pur nih kus) published On the Revolutions of the Heavenly Spheres. In it, he proposed a heliocentric, or sun-centered, model of the universe. The sun, he said, stands at the center of the universe. Earth is just one of several planets that revolve around the sun.

Most experts rejected this revolutionary theory. In Europe at the time, all scientific knowledge and many religious teachings were based on the arguments developed by classical thinkers. If Ptolemy’s reasoning about the planets was wrong, people believed, then the whole system of human knowledge might be called into question. But in the late 1500s, the Danish astronomer Tycho Brahe (tee koh brah uh) provided evidence that supported Copernicus’s theory. Brahe set up an astronomical observatory. Every night for years, he carefully observed the sky, accumulating data about the movement of the heavenly bodies.

After Brahe’s death, his assistant, the brilliant German astronomer and mathematician Johannes Kepler, used Brahe’s data to calculate the orbits of the planets revolving around the sun. His calculations supported Copernicus’s heliocentric view. At the same time, however, they showed that each planet does not move in a perfect circle, as both Ptolemy and Copernicus believed, but in an oval-shaped orbit called an ellipse.

Galileo’s “Heresies”

Scientists from many different lands built on the foundations laid by Copernicus and Kepler. In Italy, Galileo Galilei assembled an astronomical telescope. As you have read, he observed that the four moons of Jupiter move slowly around that planet—exactly, he realized, the way Copernicus said that Earth moves around the sun.

Views of the Moon

Galileo sketched the views of the moon he saw through his telescope in 1609. Pictures of the moon taken through a modern telescope look remarkably similar.

Galileo’s discoveries caused an uproar. Other scholars attacked him because his observations contradicted ancient views about the world. The Church condemned him because his ideas challenged the Christian teaching that the heavens were fixed in position to Earth, and perfect.

Vocabulary Builder

In 1633, Galileo was tried before the Inquisition, and for a year afterward he was kept under house arrest. Threatened with death unless he withdrew his “heresies,” Galileo agreed to state publicly in court that Earth stands motionless at the center of the universe. Legend has it that as he left the court he muttered, “And yet it moves.”

In Chapter 10, we are moving on to Section 2 The Enlightenment

philosophe (notice the spelling: this is not the same thing as philosopher)

separation of powers



social contract

salon (there is a common everyday word, but in reference to the Enlightenment, it means a physical place more specific and relates directly to the Enlightenment)


At this point, we will make a transition to:

Chapter 10: Revolution and Enlightenment, 1550–1800

Section 2 The Enlightenment

Ideas Spread in Salons

New literature, the arts, science, and philosophy were regular topics of discussion in salons, or informal social gatherings at which writers, artists, philosophes, and others exchanged ideas. The salon originated in the 1600s, when a group of noblewomen in Paris began inviting a few friends to their homes for poetry readings. By the 1700s, some middle-class women began holding salons. Here middle-class citizens could meet with the nobility on an equal footing to discuss and spread Enlightenment ideas.

Madame Geoffrin (zhoh fran) ran one of the most respected salons. In her home on the Rue St. Honoré (roo sant ahn ur ay), she brought together the brightest and most talented people of her day. The young musical genius Wolfgang Amadeus Mozart played for her guests, and Diderot was a regular at her weekly dinners for philosophers and poets.

Pens to Inspire Revolution


Enlightenment thinker Denis Diderot compiled a controversial 28-volume work called the Encyclopedia, which was published between 1751 and 1772. This work was a forum for Enlightenment thinkers such as Montesquieu, Rousseau, and Voltaire. These thinkers believed that with the power of reason, they could fix the problems of society. Although the Encyclopedia was banned in many places and censored in others, it would prove to be a major factor in the years of revolutions to come. It contains the passage below on freedom.

“No man has received from nature the right to give orders to others. Freedom is a gift from heaven, and every individual of the same species has the right to enjoy it as soon as he is in enjoyment of his reason.”

—Denis Diderot


* Explain how science led to the Enlightenment.
* Compare the ideas of Hobbes and Locke.
* Identify the beliefs and contributions of the philosophes.
* Summarize how economic thinking changed during this time.

Terms, People, and Places (some of these may be posted on our Shanawiki page ( as well.

natural law

Thomas Hobbes

John Locke

natural right

Rousseau Stirs Things Up

In Jean-Jacques Rousseau’s most important work, The Social Contract, he argued that in order to be free, people should do what is best for their community. Rousseau had many supporters who were inspired by his passionate writings. European monarchs, on the other hand, were angry that Rousseau was questioning authority. As a result, Rousseau worried about persecution for much of his life. The “chains” below represent the social institutions that confined society.

“Man is born free, and everywhere he is in chains.”

—Rousseau, The Social Contract

What effects did Enlightenment philosophers have on government and society?

By the early 1700s, European thinkers felt that nothing was beyond the reach of the human mind. Through the use of reason, insisted these thinkers, people and governments could solve every social, political, and economic problem. In essence, these writers, scholars, and philosophers felt they could change the world.

Scientific Revolution Sparks the Enlightenment

The Scientific Revolution of the 1500s and 1600s had transformed the way people in Europe looked at the world. In the 1700s, other scientists expanded European knowledge. For example, Edward Jenner developed a vaccine against smallpox, a disease whose path of death spanned the centuries.

Scientific successes convinced educated Europeans of the power of human reason. Natural law, or rules discoverable by reason, govern scientific forces such as gravity and magnetism. Why not, then, use natural law to better understand social, economic, and political problems?

Using the methods of the new science, reformers thus set out to study human behavior and solve the problems of society. In this way, the Scientific Revolution led to another revolution in thinking, known as the Enlightenment.

Immanuel Kant, a German philosopher best known for his work The Critique of Pure Reason, was one of the first to describe this era with the word “Enlightenment.” Despite Kant’s skepticism about the power of reason, he was enthusiastic about the Enlightenment and believed, like many European philosophers, that natural law could help explain aspects of humanity.

Hobbes and Locke Have Conflicting Views

Thomas Hobbes and John Locke, two seventeenth-century English thinkers, set forth ideas that were to become key to the Enlightenment. Both men lived through the upheavals of the English Civil War. Yet they came to very different conclusions about human nature and the role of government.

Hobbes Believes in Powerful Government

Thomas Hobbes outlined his ideas in a work titled Leviathan. In it, he argued that people were naturally cruel, greedy, and selfish. If not strictly controlled, they would fight, rob, and oppress one another. Life in the “state of nature”—without laws or other control—would be “solitary, poor, nasty, brutish, and short.”

To escape that “brutish” life, said Hobbes, people entered into a social contract, an agreement by which they gave up their freedom for an organized society. Hobbes believed that only a powerful government could ensure an orderly society. For him, such a government was an absolute monarchy, which could impose order and compel obedience.

Hobbes Writes the Leviathan

The title page from Leviathan (1651) by Hobbes demonstrates his belief in a powerful ruler. The monarch here represents the Leviathan who rises above all of society.

Locke Advocates Natural Rights

John Locke had a more optimistic view of human nature. He thought people were basically reasonable and moral. Further, they had certain natural rights, or rights that belonged to all humans from birth. These included the right to life, liberty, and property.

In Two Treatises of Government, Locke argued that people formed governments to protect their natural rights. The best kind of government, he said, had limited power and was accepted by all citizens. Thus, unlike Hobbes, Locke rejected absolute monarchy.

England during this time experienced a shift in political power known as the Glorious Revolution. James II, an unpopular absolute monarch, left the throne and fled England in 1688. Locke later wrote that he thought James II deserved to be dethroned for violating the rights of the English.

Locke proposed a radical idea about this time. A government, he said, has an obligation to the people it governs. If a government fails its obligations or violates people’s natural rights, the people have the right to overthrow that government.

Locke’s idea would one day influence leaders of the American Revolution, such as Benjamin Franklin, Thomas Jefferson, and James Madison. Locke’s idea of the right of revolution would also echo across Europe and Latin America in the centuries that followed.

The Philosophes

In the 1700s, there was a flowering of Enlightenment thought. This was when a group of Enlightenment thinkers in France applied the methods of science to understand and improve society. They believed that the use of reason could lead to reforms of government, law, and society. These thinkers were called philosophes (fee loh zohfs), which means “philosophers.” Their ideas soon spread beyond France and even beyond Europe.

Montesquieu Advances the Idea of Separation of Powers

An early and influential thinker was Baron de Montesquieu (mahn tus kyoo). Montesquieu studied the governments of Europe, from Italy to England. He read about ancient and medieval Europe, and learned about Chinese and Native American cultures. His sharp criticism of absolute monarchy would open doors for later debate.


François-Marie Arouet, most commonly known as Voltaire (1694–1778) was an impassioned poet, historian, essayist, and philosopher who wrote with cutting sarcasm and sharp wit.

Voltaire was sent to the Bastille prison twice due to his criticism of French authorities and was eventually banned from Paris. When he was able to return to France, he wrote about political and religious freedom.

Voltaire spent his life fighting enemies of freedom, such as ignorance, superstition, and intolerance.


Born to wealth, Charles Louis de Secondat (1689–1755) inherited the title Baron de Montesquieu from his uncle. Like many other reformers, he did not let his privileged status keep him from becoming a voice for democracy.

His first book titled Persian Letters ridiculed the French government and social classes. In his work published in 1748, The Spirit of the Laws, he advanced the idea of separation of powers—a foundation of modern democracy.

In 1748, Montesquieu published The Spirit of the Laws, in which he discussed governments throughout history. Montesquieu felt that the best way to protect liberty was to divide the various functions and powers of government among three branches: the legislative, executive, and judicial.

He also felt that each branch of government should be able to serve as a check on the other two, an idea that we call checks and balances. Montesquieu’s beliefs would soon profoundly affect the Framers of the United States Constitution.

Voltaire Defends Freedom of Thought

Probably the most famous of the philosophes was François-Marie Arouet, who took the name Voltaire. “My trade,” said Voltaire, “is to say what I think,” and he did so throughout his long, controversial life.

Voltaire used biting wit as a weapon to expose the abuses of his day. He targeted corrupt officials and idle aristocrats. With his pen, he battled inequality, injustice, and superstition. He detested the slave trade and deplored religious prejudice.

Voltaire’s outspoken attacks offended both the French government and the Catholic Church. He was imprisoned and forced into exile. Even as he saw his books outlawed and even burned, he continued to defend the principle of freedom of speech.

Diderot Edits the Encyclopedia

Denis Diderot (dee duh roh) worked for years to produce a 28-volume set of books called the Encyclopedia. As the editor, Diderot did more than just compile articles.

His purpose was “to change the general way of thinking” by explaining ideas on topics such as government, philosophy, and religion. Diderot’s Encyclopedia included articles by leading thinkers of the day, including Montesquieu and Voltaire.

In these articles, the philosophes denounced slavery, praised freedom of expression, and urged education for all. They attacked divine-right theory and traditional religions. Critics raised an outcry.

The French government argued that the Encyclopedia was an attack on public morals, and the pope threatened to excommunicate Roman Catholics who bought or read the volumes.

Despite these and other efforts to ban the Encyclopedia, more than 4,000 copies were printed between 1751 and 1789. When translated into other languages, the Encyclopedia helped spread Enlightenment ideas throughout Europe and across the Atlantic Ocean to the Americas.

Rousseau Promotes The Social Contract

Jean-Jacques Rousseau (roo soh), believed that people in their natural state were basically good. This natural innocence, he felt, was corrupted by the evils of society, especially the unequal distribution of property.

Many reformers and revolutionaries later adopted this view. Among them were Thomas Paine and Marquis de Lafayette, who were leading figures of the American and French Revolutions.

In 1762, Rousseau set forth his ideas about government and society in The Social Contract. Rousseau felt that society placed too many limitations on people’s behavior.

He believed that some controls were necessary, but that they should be minimal. Additionally, only governments that had been freely elected should impose these controls.

Rousseau put his faith in the “general will,” or the best conscience of the people. The good of the community as a whole, he said, should be placed above individual interests.

Rousseau has influenced political and social thinkers for more than 200 years. Woven through his work is a hatred of all forms of political and economic oppression. His bold ideas would help fan the flames of revolt in years to come.

Women Challenge the Philosophes

The Enlightenment slogan “free and equal” did not apply to women. Though the philosophes said women had natural rights, their rights were limited to the areas of home and family.

By the mid- to late-1700s, a small but growing number of women protested this view. Germaine de Staël in France and Catharine Macaulay and Mary Wollstonecraft in Britain argued that women were being excluded from the social contract itself. Their arguments, however, were ridiculed and often sharply condemned.

Wollstonecraft was a well-known British social critic. She accepted that a woman’s first duty was to be a good mother but felt that a woman should be able to decide what was in her own interest without depending on her husband.

In 1792, Wollstonecraft published A Vindication of the Rights of Woman. In it, she called for equal education for girls and boys. Only education, she argued, could give women the tools they needed to participate equally with men in public life.

Contact info:
Shanahan: 610.518.1300 x4281
For Honors Business Economics and Honors World History II:
For World History 2:

Book references are available at:


HW or in-class work due the following day.

You may email to

1. In the textbook, p. 299, answer #6 & #8.

Honors Business Economics Chapter 1 Section 1, 16 September 2010

Current Events:

CBS News aired a piece about economic liberty on Friday, July 2, 1993 noticing that entrepreneurial practices were being over regulated.

U.S. Unemployment 1945 - 2010

When do the two most severe spikes upward occur?

The lower horizontal line is 5% unemployment and the higher horizontal line is 10%.

A sign of desperation for an unemployed person.

Updated 07 15 10 The Decline: The Geography of a Recession by LaToya Egwuekwe, :38

If this graphic begins to grow darker, reflecting how serious the recession is now, please let me know.

According to the U.S. Department of Labor's Bureau of Labor Statistics, there are nearly 31 million people currently unemployed -- that's including those involuntarily working part-time and those who want a job, but have given up on trying to find one. In the face of the worst economic upheaval since the Great Depression, millions of Americans are hurting. "The Decline: The Geography of a Recession," as created by labor writer LaToya Egwuekwe, serves as a vivid representation of just how much. Watch the deteriorating transformation of the U.S. economy from January 2007 -- approximately one year before the start of the recession -- to the most recent unemployment data available today. Original link: For more information, email

Chapter 1: What Is Economics?

Chapter Overview

Section 1: Scarcity and the Science of Economics

Economics is a social science that deals with the fundamental economic problem of scarcity—a condition caused by the combination of seemingly unlimited wants and limited resources. Because of this, people are forced to make choices and decisions about how they will use their resources. People have needs such as food, clothing, and shelter; people have wants, which are nonessential ways of expressing needs. The notion of TINSTAAFL, which stands for There Is No Such Thing As A Free Lunch, is often used to remind us that resources are scarce and that we must make careful economic decisions regarding WHAT, HOW, and FOR WHOM to produce. Other concepts relevant to economics are the four factors of production: land, capital, labor, and entrepreneurs. And the four key elements to this study are description, analysis, explanation, and prediction.


This is an excellent illustration for your notebook.

Scarcity & Choice (Shhh, if the volume is too low), 4:36
In-class assignment for today (hand in as a hard copy or email with your HW):

According to the video, what is Economics?

What is scarcity?

Can you provide an example of a choice that is not rational nor is it in your self-interest?

Definition of Economics

Definition of scarcity
The Factors of Production, p. 8

Graphic Organizer: Chapter 1, Section 1 - Review, The (4) Factors of Production, p. 8

p. 8: Descriptions of Land, Capital, Labor, and Entrepreneurs




Entrepreneurs, p. 9

A good is said to be an economic good (also known as a scarce good) if the quantity of the good demanded exceeds the quantity supplied at a zero price. In other words, a good is an economic good if people want more of it than would be available if the good were available for free.

A good is said to be a free good if the quantity of the good supplied exceeds the quantity demanded at a zero price. In other words, a good is a free good if there is more than enough available for everyone even when the good is free. Economists argue that there are relatively few, if any, free goods.

An item is said to be an economic bad if people are willing to pay to avoid the item. Examples of economic "bads" include things like garbage, pollution, and illness.

Goods that are used to produce other goods or services are called economic resources (and are also known as inputs or factors of production). These resources are often categorized into the following groups:

1. Land,
2. Labor,
3. Capital, and
4. Entrepreneurial ability.

The category of "land" includes all natural resources. These natural resources include the land itself, as well as any minerals, oil deposits, timber, or water that exists on or below the ground. This category is sometimes described as including only the "free gifts of nature," those resources that exist independent of human action.

The labor input consists of the physical and intellectual services provided by human beings. The resource called "capital" consists of the machinery and equipment used to produce output.

This point requires an important, and to prevent confusion, distinction to be made.

Note that the use of the term "capital" differs from the everyday use of this term. Stocks, bonds, and other financial assets are not capital under this definition of the term.

However, in standard financial terminology, this is indeed what capital means.

Entrepreneurial ability refers to the ability to organize production and bear risks.

The resource payment associated with each resource is listed in the table below:

Economic Resource Resource Payment
land rent
labor wages
capital interest
entrepreneurial ability profit

And, again here below:


Chapter 1 Section 2 Basic Economic Concepts

Overview: Section 2 Basic Economic Concepts

The concepts of goods, services, consumers, markets, factor markets, product markets, productivity, economic growth, and economic interdependence are explained and are linked in the circular flow diagram. Productivity is necessary for economic growth, and growth takes place when specialization and the division of labor are present. In addition, human capital, the sum of our skills, abilities, health, and motivations are other important components of growth.

Guide to Reading, p. 12

Section Preview

Content Vocabulary

Academic Vocabulary

Reading Strategy

Answer to Reading Strategy Graphic

Products in the News

Comic Books a Big Business

Goods, Services, and Consumers, p. 13


We were introduced to goods in the last section. A good is said to be an economic good (also known as a scarce good) if the quantity of the good demanded exceeds the quantity supplied at a zero price. In other words, a good is an economic good if people want more of it than would be available if the good were available for free.

A good is said to be a free good if the quantity of the good supplied exceeds the quantity demanded at a zero price. In other words, a good is a free good if there is more than enough available for everyone even when the good is free. Economists argue that there are relatively few, if any, free goods.



Reading Check


How are goods, services, and consumers related?

Value, Utility, and Wealth, p. 14

The Paradox of Value




Reading Check


How are value and utility related?

The Circular Flow of Economic Activity, p. 15

Circular flow model, 4:21
A brief video using the circular flow model to illustrate the basic nature of product markets and factor markets.

Factor Markets

Factor Markets, 3:01

The video is about factor markets. In economics factor markets are also termed as resource markets referring to the place where, the factors of production are bought and sold. The factors of production include land, labor, capital, raw materials and management. All the factors have a consideration and each factor's consideration is addressed in a differently.

Product Markets

Reading Check


What roles do factor markets and product markets play in the economy?

Productivity and Economic Growth, p. 16

Writers Talk Ross Gittins: Higher productivity, 3:45

Economics journalist Ross Gittins talks about his book Gittinomics and ways to create higher productivity.


Investing in Human Capital

Division of Labor and Specialization, p. 17

In The Wealth of Nations, Adam Smith argued that economic growth occurred as a result of specialization and division of labor. If each household produced every commodity it consumed, the total level of consumption and production in a society will be small. If each individual specializes in the productive activity at which they are "best," total output will be higher. Specialization provides such gains because it:

* allows individuals to specialize in those activities in which they are more talented,
* individuals become more proficient at a task that they perform repeatedly, and
* less time is lost switching from task to task.

Increased specialization by workers requires a growth in trade. Adam Smith argued that growing specialization and trade was the ultimate cause of economic growth.

Adam Smith and David Ricardo argued that similar benefits accrue from international specialization and trade. If each country specializes in the types of production at which they are best suited, the total amount of goods and services produced in the world economy will increase. Let's examine these arguments a bit more carefully.

There are two measures that are commonly used to determine whether an individual or a country is "best" at a particular activity: absolute advantage and comparative advantage. These two concepts are often confused. An individual (or country) possesses an absolute advantage in the production of a good if the individual (or country) can produce more than can other individuals (or countries). An individual (or country) possesses a comparative advantage in the production of a good if the individual (or country) can produce the good at the lowest opportunity cost.

Economic Interdependence

Let's examine an example illustrating the difference between these two concepts. Suppose that the U.S. and Japan only produced two goods: CD players and wheat. The diagram below represents production possibilities curves for these two countries. (These numbers are obviously hypothetical).

Notice that the U.S. has an absolute advantage in the production of each commodity. To determine who has a comparative advantage, though, it is necessary to compute the opportunity cost for each good. It is assumed that the production possibilities curve (PPC) is linear to simplify this discussion (we will talk about the PPC in greater detail in a subsequent lesson).

The opportunity cost of one unit of CD players in the U.S. is 2 units of wheat. In Japan, the opportunity cost of one unit of CD players is 4/3 of a unit of wheat. Thus, Japan possesses a comparative advantage in CD player production.

The U.S. however, has a comparative advantage in wheat production since the opportunity cost of a unit of wheat is 1/2 of a unit of CD players in the U.S., but is 3/4 of a unit of CD players in Japan.

If each country specializes in producing the good in which it possesses a comparative advantage, it can acquire the other good through trade at a cost that is less than the opportunity cost of production in the domestic economy. For example, suppose that the U.S. and Japan agree to trade one unit of CD players for 1.6 units of wheat. The U.S. gains from this trade because it can acquire a unit of CD players for 1.6 units of wheat, which is less than the opportunity cost of producing CD players domestically. Japan gains from this trade since it's able to trade one CD player for 1.6 units of wheat while it only cost Japan 4/3 of a unit of wheat to produce a unit of CD players.

If each country produces only those goods in which it possesses a comparative advantage, each good is produced in the global economy at the lowest opportunity cost. This results in an increase in the level of total output.

Reading Check


What role does specialization play in the productivity of an economy?

Profiles in Economics, p. 18

Adam Smith (1723-1790)
French thinkers known as physiocrats focused on economic reforms. Like the philosophes, physiocrats based their thinking on natural laws. The physiocrats claimed that their rational economic system was based on the natural laws of economics.

Physiocrats rejected mercantilism, which required government regulation of the economy to achieve a favorable balance of trade. Instead, they urged a policy of laissez faire (les ay fehr), allowing business to operate with little or no government interference. Physiocrats also supported free trade and opposed tariffs.

Scottish economist Adam Smith greatly admired the physiocrats. In his influential work The Wealth of Nations, he argued that the free market should be allowed to regulate business activity. Smith tried to show how manufacturing, trade, wages, profits, and economic growth were all linked to the market forces of supply and demand. Wherever there was a demand for goods or services, he said, suppliers would seek to meet that demand in order to gain profits. Smith was a strong supporter of laissez faire. However, he felt that government had a duty to protect society, administer justice, and provide public works. Adam Smith’s ideas would help to shape productive economies in the 1800s and 1900s.

Division of Labor

Smith, a Scottish economist, argued that economies function most efficiently and fairly when individuals are allowed to pursue their own interests.

One person may decide to be a baker, another a merchant. One person may choose to sell his land, another to farm it. But all of these private decisions, made by rational, self-interested individuals, Smith argued, combine to produce a healthy, growing economy.

Invisible Hand

The great threat to economic growth, Smith argued, was government intervention—the government telling people what to do would only muck up the works. Government intervention distorted the natural and rational exercise of free, prudent choice. When left to their own natural operation, the private decisions made by thousands of rational economic players were tied into prosperous harmony by the “invisible hand” of the market.

Wealth of Nations

If you haven't read his famous book, it's absolutely worth checking out, whether or not you consider yourself a disciple of the free market. The Wealth of Nations is, without a doubt, one of the most important books of all time. And the ideas it contained played a powerful role in shaping the development of American economic thought. The book is relevant it matters today what he wrote.

Adam Smith's metaphor of the invisible hand remains one of the most important and influential ideas in economics, even today. As Americans have recently grappled with questions about how government should and should not intervene in the economy, many have turned to Smith for guidance.

What would Adam Smith think about the stimulus bill? About universal government-organized health insurance? About bailouts for companies judged "too big to fail"?

Cf. Adam Smith,

In the Circular Flow, 2:56

A song/video made for a high school economics class. It was recorded by one person for all five parts using Audacity. The song is from the original "In the Still of the Night" recorded by the Five Satins and later covered by Boyz II Men.

Sometimes, a Song Says it Better: Billionaire, by Travis McCoy, 3:31

Travis wants to be a billionaire. Adam Smith would be proud.

Textbook site (and class resources below):

Economics: Principles and Practices

Economics Web Links

Games & Simulations

Stock Market Game (SMG)

"Student teams are $15 each."

Mankiw Macroeconomics Presidential Game

Please note: this game requires the Shockwave version 7.0 or higher: test page for Shockwave.

There is an abundance of economics resources for Mankiw (edition 5e) as well.

Textbook site:

Economics: Principles and Practices

Economics Web Links

Games & Simulations

National Geographic MapMachine and maps to illustrate areas.

Study-to-Go: download a portable version of your textbook-related materials onto your Palm or Pocket PC, including Self-Check Quizzes.


This Index page collects all of the stories that we have written about the nation’s economic and financial crisis.


Cf. Scarcity

Energy Crisis: Resource Scarcity, Oil Wars & Climate Change, 1:25:18

Participants: George Soros; Mary Kaldor; Yahia Said; Sir Nicholas Stern. Chaired by Howard Davies

Description: This event seeks to promote their political agenda and thinking about energy security, and marks the launch of the publication Oil Wars, edited by Mary Kaldor, Terry Karl and Yahia Said.

July 4, 2007 at the London School of Economics.

(Audio only unfortunately)

James Brown, "I Don't Want Nobody To Give Me Nothing (Open Up The Door I'll Get It Myself)," Mike Douglas Show, June 30, 1969.


Lyrics reproduced for educational purposes only; copyright remains in the hands of the lawful owners.

Lyrics by: James Brown, #20, Apr '69, Hot 100, #3, Apr '69, R&B


I don't want nobody
To give me nothing
Open up the door
I'll get it myself


Do you hear me

Don't give me denegration
Give me true communication
Don't give me sorrow
I want equal opportunity
To live tomorrow

Give me schools
And give me better books
So I can read about myself
And gain my truly looks

Do you hear me now, now


Some of us try
As hard as we can
We don't want no sympathy
We just wanna be a man

Do you hear me


We got talents we can use
On our side of town
Let's get our heads together
And get it up from the ground

When some of us make money
People hear about our people

Gotta grab out a honey
Forget about honey
Do you now, let me hear, hey

Come on, I got to have it
Come on, I need it
I got to have it, come on
I got to have it, ohh

Lordy, Lordy, Lordy
Lordy, Lordy, Lordy
Play with your bad self
Come on, baby
Come here now
Gotta get it

Got to get myself together
So many things I've got to do

Log on to kill this message.

So many things I've got to do
I don't no help from you
Tell everybody, body else
All of these things, baby
I'll do it myself
Come on, hey

I got to have it
I, said I, said I
Said I, said I, I

Do you hear me


I'm not gonna tell
You what to do
I'm not gonna raise a fuss
But before you make another move
Let's start by taking care of us

Do you hear me


Kids get that education
And don't you take no more
Cause we gonna get
This thing together
You got to carry the bell

I don't want nobody
To give me nothing
Open up the door
Open up the door
Open up the door
Open up the door
Open up the door
Hey, hey, hey, hey


Can you dig the groove
Can you make the move....


Email me at, or in a hard copy hand in.
According to the lesson today, goods that are used to produce other goods or services are called economic resources (and are also known as inputs or factors of production). These resources are often categorized into the following groups:

1. Land,
2. Labor,
3. Capital, and
4. Entrepreneurial ability.

This assignment asks you to describe a firm or business (preferably an entrepreneur but any one will do if you do not know one) by explaining how the business operates according to the four factors of production listed above.

If you are exceptionally creative, try to imagine a business you could start as an entrepreneur. How could you start a business according to the four factors of production?