ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Specialization involves focusing on a specific skill, activity, or production process, such as a South American company harvesting bananas, to become the leader or expert.

Detailed explanation-2: -Answer and Explanation: Countries specialize in the production of goods for which they have a comparative advantage. Reason: The comparative advantage theory states that a country should produce the goods in which it has comparative advantage. This will promote innovation and specialization in the production of goods.

Detailed explanation-3: -Glossary. absolute advantage when one country can use fewer resources to produce a good compared to another country; when a country is more productive compared to another country gain from trade a country that can consume more than it can produce as a result of specialization and trade.

Detailed explanation-4: -One country may be more productive than others in all goods, in the sense that it can produce any good using fewer inputs (such as capital and labor) than other countries require to produce the same good.