ECONOMICS
DIVISION OF LABOR AND SPECIALIZATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Since a country cannot produce all of its needs, it makes sense for it to specialize in what it can produce efficiently, then trade with another country that specializes in what it needs.
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It does not encourage trade because all countries can produce whatever they want.
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Countries have unlimited resources so they don’t need to specialize.
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Because Mr. Randa and Mr. Tonkli said so!
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Detailed explanation-1: -Whenever countries have different opportunity costs in production they can benefit from specialization and trade. Benefits of specialization include greater economic efficiency, consumer benefits, and opportunities for growth for competitive sectors.
Detailed explanation-2: -When nations specialize, this exchange creates gains from trade. The benefits of specialization include a larger quantity of goods and services that can be produced, improved productivity, production beyond a nation’s production possibility curve, and finally, resources that can be used more efficiently.
Detailed explanation-3: -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-4: -Why don’t countries specialize in the production of just a few goods for which they have a comparative advantage? In most cases, increasing opportunity costs would accompany the continually increasing production of a product specialist.