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Understanding Prosperity Through Change, Progress, and Trade

90 min

Video supplements additionally published on a product of Hoover Institution, Stanford University. To view them in their original format, click here.

Guiding Questions

  • How does trade increase individual and societal prosperity?
  • How has the world made economic progress in the past few centuries?
  • What does it mean to prosper individually versus living in a prosperous society?


  • Students will define prosperity, comparative advantage, factors of production, capital, and entrepreneurship 
  • Students will examine examples of change and progress throughout history
  • Students will evaluate the costs and benefits of change and progress on society
  • Students will use cost/benefit analysis to identify the relationship between trade and prosperity.
  • Students will explain the connection between the principles of a free society, economic change, and economic prosperity.

Student Handouts

Teacher Handouts

  • Prosperity
  • Comparative Advantage
  • Factors of Production
  • Capital
  • Entrepreneurship

Facilitation Notes

  • Depending on the level of scaffolding needed for your students, consider distributing the video viewing guides for added support.
  • Teachers should review the idea of comparative advantage before doing this lesson.


  • Scaffolding Note: Prior to engaging with the videos and other aspects of the lesson, have students review and complete the interactive glossary.  Alternatively, focus on a term at a time just before it is introduced.  Notes of where in the lesson terms are introduced are provided throughout the lesson plan. 
  • Optional:  Use the following activity if you have not yet defined and discussed Prosperity.
    • Have students watch the Prosperity video either independently or as a whole class.  Direct student attention to the focus questions: As you watch, think about what prosperity means or looks like to you and how it might be achieved. Students can record notes in their journal, notebook, online, or on the provided optional handout.
      • Have students turn to a neighbor and share reflections. As a pair, students decide which focus question and response to share aloud with the class.
      • Allow students to share their reflections with the class.  Engage in class discussion as time allows.
      • Scaffolding notes:  
      • Glossary term(s): Prosperity
      • Use the viewing guides to create checks for understanding.  The questions from these guides could be added to a video editing tool such as Playposit or Edpuzzle.


  • Transition: The first characteristic of prosperity we’ll take a look at is trade. As you watch this video, think about how trade impacts your daily life. Write down your thoughts as you watch the video.
    • As students watch the video they should record their ideas and reflections. Students can record notes in their journal, notebook, online, or on the provided optional handout.
  • Turn to your neighbor and share your reflections. As a pair, decide which focus question and response you’ll share with the class.
    • Allow students to share their reflections with the class.  Engage in class discussion as time allows.
  • After students watch the Trade video, write the following quote on the board for students to contemplate:
    • “Commerce is the cure for the most destructive prejudices, for it is almost a general rule that wherever we find agreeable manners, there commerce flourishes; and that wherever there is commerce, there we meet with agreeable manners. Commercial laws, it may be said, improve manners… we every day see, that they polish and refine the most barbarous.”  — Baron de Montesquieu (1689-1755)

  • Give students three minutes to individually record their reflection of the Baron de Montesquieu quote. 
  • After students have had time to reflect on the quotes, give students a few minutes to “turn and talk” to their neighbor about what they think the quote means and why it might be important.  Have a few students report out to the entire class.
  • Transition: Now that we have a good understanding of trade, let’s take a look at it in the real world. People use trade to acquire items that they want in exchange for items they have produced or money. Now we will play a game in which we practice trading.
  • Play the “Brown Bag” Trade Game (Instructions are below): 
    • Instruct students to bring something they no longer want and do not mind not getting back to class the next day.  Be sure they bring their items in a brown bag – or a bag that people cannot see through.
    • Once in class, have all students place their bagged items at the front of the class.  Section off the classroom, to allow small groups to go and grab a bag – instruct students to not grab their own bag.  Also instruct students to not look inside their bags, or show others what is in their bags until you instruct them to.
    • Once all students have chosen a bagged item, let the students look at their item they received without showing others.  Then ask students to rate their item on a scale of 1 to 5 (1 being this item is horrible, I do not like it at all, why would someone bring this to give? To 5 being I love the item and I cannot wait to take it home with me).  Create a continuum on the board to keep track of how many 1s, 2s, 3s, 4s, and 5s are there.
    • Round 1 of trade: Allow students to trade with the 3-4 people closest to them…. In order to trade, students will need to share what is in their bags with those specific people.  Students do not have to trade, if they do not want to… After 1-2 minutes, have students rate their items again on the 1-5 scale (even if they did not trade.) Students can stay at their same rating, or they can increase or decrease their ratings.
    • Round 2 of trade: Now allow students to trade with a larger section of the class (but not the whole class yet) – repeat steps from above.
    • Round 3 of trade: In the final round of trades, open up free trade to their entire class.  After they have all had the chance to see what everyone has, and decide if they want to trade or not, have the students rate for the final time.
    • If you would like to further exemplify trade barriers – add one more round of trading in and deny a group of students the ability to trade – i.e. anyone of 5’9’’ or anyone with red hair etc.
    • After the trading activity, here are some questions to engage the class in conversation with:
      • What made you decide if you wanted to trade or not?
      • Next have students look at the trends of the ratings over the four times they rated their items.
      • How did expanding the number of people students could trade affect students ratings?  
  • Give students 5 minutes in small groups to reflect on the connection between the “Anticipate” quote and the “Brown Bag” Trade Game.  What did they find to be the most effective method in conducting trades with classmates?


  • Scaffolding note
    1.  Glossary term(s): Comparative Advantage, Factors of Production, Capital
  • Transition: Trade allows people to specialize in certain fields that they are best at given their skills and resources. They then interact with others who have their own skills and resources in trade. This concept of people being able to produce a good or service in the smallest amount of time is called comparative advantage. Let’s take a look at some real world examples of comparative advantage.
  • Break the class into 4 groups, and give each group one of the following scenarios.  
  1. Can Simone Biles play basketball well against LeBron James?  Could LeBron James compete well in the balance beam against Simone Biles?  Explain your reasoning.
  2. Should Elon Musk mow his own lawn or should he pay someone else to do it? Explain your reasoning.
  3. Should you represent yourself in a court of law or should you hire an attorney to represent you?  Explain your reasoning.
  4. Why do some people hire someone to do things they could do themselves, such as basic plumbing, landscaping, etc.?
  • While in their small groups, have the students read the scenario, discuss, and explain its economic principles.  Be sure to have the groups select a spokesperson to share out to the class their scenario and economic reasoning.  
  • After all groups have shared their scenarios and economic thoughts, have the class determine the economic principle that unites/defines all four of these cases.
  • Next ask the class to brainstorm what leads to someone gaining the comparative advantage.
  • Transition: When people are able to specialize in work, they become better and better at their job. They are able to produce goods in more efficient ways, or provide higher quality services. This in turn leads to change and progress in societies. 
  • Have students watch the Change and Progress videos while filling out the section in the Student Handout. 
  • Based on teacher preference and classroom needs, have students work either individually or in small groups to read the provided case studies about economic change and progress.
  • After the students or groups have read the case studies, discuss as a class the explore questions.
    • Based on what you just read, what circumstances made economic change possible?

Assess & Reflect

  • Students should contemplate the following quotes. Choose two and then briefly explain in their own words what the quote means in a modern context. How did changes in trade and comparative advantage help lead to peaceful prosperity in many parts of the world in the modern day?
  • You can respond by writing, or by recording your answer on Flipgrid or another video tool.  Be sure to answer in complete sentences.
    •  “Peace is the natural effect of trade. Two nations who traffic with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities. The total privation of trade, on the contrary, produces robbery .” – Baron de Montesquieu (1689-1755)

    • “If goods don’t cross borders, armies will.” – Frederic Bastiat (1801-1856)

    • “Go into the London Stock Exchange…and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker.” – Voltaire (1694-1778)

    • “Commerce tends to wear off those prejudices which maintain distinction & animosity between nations. It softens & polishes the manners of men. It unites them, by one of the strongest of all ties, the desire of supplying their mutual wants. It disposes them to peace, by establishing in every state an order of citizens bound by their interest to be the guardians of public tranquility. As soon as the commercial spirit gains…an ascendant in any society, we discover a new genius in its policy, its alliances, its wars, and its negotiations” – William Robertson (1721-1793)


  • Scaffolding note
    •  Glossary term(s): Entrepreneurship
  • Take the skills and concepts learned in this lesson and think of them in relation to an entrepreneur of your choice.  
  • For your entrepreneur, address the following areas:
    • What did your entrepreneur specialize in?
    • How did that specialization lead to your entrepreneur gaining a comparative advantage?
    • What unique insight(s) did your entrepreneur have that others in the same industry did not?
    • How does/did the work of your entrepreneur lead to economic change and progress?
    • How has your entrepreneur’s work/specialization affected prosperity locally, nationally and/or internationally? 
  • After researching your entrepreneur, briefly reflect upon a skill or insight that they demonstrated which you think might be helpful if you applied it  in your daily life.

See the list for ideas.  (If your students want to research someone not on the list, be sure students can connect the entrepreneur to economic change and progress by using their comparative advantage)

Potential entrepreneur choices for students to research: 

  • Henry Ford (affordable automobiles)
  • Madam C.J. Walker (African-American hair care products)
  • Jan Ernst Matzeliger (low-cost shoes)
  • William Boeing (jet airplanes)
  • Clarence Birdseye (Frozen vegetables)
  • Mary Kay Ash (cosmetics)
  • Michael Dell (computers)
  • Steve Jobs (Apple)
  • Thomas Edison (inventor)
  • Larry Ellison (computer/tech company)
  • Ray Kroc (McDonalds)
  • James J Hill (The Great Northern Railroad)
  • Levi Strauss (Jeans)
  • Oprah Winfrey (reporter/entrepreneur)
  • Ted Turner (Cable news)
  • Sam Walton (Wal-Mart)
  • Walt Disney (Disney World)
  • Guillermo Gonzalez Camarena (Color TV)
  • Arturo Arias Suarez (earthquake seismology technology)
  • Tom Love (Love’s travel stops)

Select one of the innovations listed below and evaluate the impact it has had on progress in your daily life:. Airplanes, Computers, Internet, Cell phone, GPS

To do so:

  • Talk to adults who can help you reflect what life might have been like without your chosen innovation.
  • Write a reflect that includes:
    • What would your life be like had some of these things not been invented?
    • What are the costs and benefits of progress?

Student Handouts

Next Lesson

Understanding the Role of Constitutional Government in Promoting Economic Prosperity

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