specialized tasks by using specialized machinery and robotics. Each
worker repeatedly does one or a few small tasks that represents only a
small fraction of those necessary to produce any one product.
Money and Trade
People who specialize in doing only one thing must satisfy most of their
wants by consuming things made by other people. In early societies the
exchange of goods and services took place by simple mutual agreement
among neighbours. Over time, however, trading became centred on
particular gathering places called markets. For example, the French
markets or trade fairs of Champagne were known throughout Europe as
early as the eleventh century. Even now, many small towns in Canada
have regular market days. Today, however, the term “market” has a much
broader meaning, referring to any institutions that allow buyers and
sellers to transact with each other, which could be by meeting physically
or by trading over the Internet. Also, we use the term “market economy”
to refer to a society in which people specialize in productive activities and
meet most of their material wants through voluntary market transactions
with other people.
Specialization must be accompanied by trade. People who produce only one thing must trade
most of it with other people to obtain all the other things they want.Early trading was by means of barter , the trading of goods directly for
other goods. But barter is costly in terms of time spent searching out
satisfactory exchanges. If a farmer has wheat but wants a hammer, he