Question

Economic theory defines specialization as the production of one or just a few goods and services. Specialization refers to how an individual, organization, state or country focuses available resources. Instead of trying to produce and sell many different products, people or countries use overstock to trade for what they may need. The system trade uses the concept of specialization. One country may have the resources to produce sugar at a low cost. Another country may choose to specialize in beef. Each produces more than what they need in order to obtain other goods at a lower cost. What conclusion can be inferred from the above text?

Answer 1

Both countries can benefit from trade through specialization.

Step-by-step explanation:

Specialization refers to the situation when an individual, organization or country focuses on available resources and instead of producing a lot of products, they produce what they may need.

A country achieves specialization by producing a greater quantity of the goods it can produce at lower opportunity cost.

Through specialization, both countries involved in trade can produce well in a larger quantities than they need to consume. They trade the excess goods and are able to consume at a point beyond their production possibility curve.