ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When people specialize, the resulting divisions of labor increase productivity. However those who specialize must trade to obtain what they do not make themselves. This trade gives rise to economic interdependence, as people come to depend on one another for goods and services.

Detailed explanation-2: -Specialization implies greater economic prosperity than self-sufficiency, and greater specialization reflects greater prosperity. Given the extreme specialization of our economy, simple government policies miss the important differences among economic actors.

Detailed explanation-3: -Scarcity means that the total amount of resources available in society is limited so that they aren’t enough to meet the unlimited “needs” and “desires.” Specialization could help to reduce the burdensome of scarcity. However, it wouldn’t be able to eliminate it completely.

Detailed explanation-4: -Specialization Leads to Economies of Scale As labor is divided amongst workers, workers are able to focus on a few or even one task. The more they focus on one task, the more efficient they become at this task, which means that less time and less money is involved in producing a good.