ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Concept 7 explained that specialization creates a need for voluntary exchange. For example, a software programmer will only devote her scarce time to coding if she trusts that someone else is producing food she needs to survive – and she will be able to trade for them.

Detailed explanation-2: -Specialization encourages voluntary trade and can be a positive factor in a country’s economy. Specialization occurs when one country can produce a good or service at a lower opportunity cost than another country.

Detailed explanation-3: -The division of labour has furthered the invention of machines. In fact, the more the division, the more it is uniformly repeated, the more automatic becomes the movement of the worker who executes his very small part in the whole production process. That is tantamount to replacing human labour by machines.

Detailed explanation-4: -How can specialization result in greater voluntary exchange between countries? O A. Specialization allows countries to increase the opportunity costs of trading with one another.

Detailed explanation-5: -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.