Question

Define specialization and, with an example, show how specialization and voluntary exchange benefit both buyers and sellers in the economy.

Answer 1

Specialization refers to the process whereby a country or an individual decide to concentrate on production of limited variety of goods in which he has economic advantage and relies on other countries or individual for getting goods which he can not produce himself.
The advantage of specialization is that people become experts at what they do and produce quality goods. Specialization enable people and countries of the world to interact with one another.
An example of specialization in international trade is the production of cocoa bean which is used to make cocoa beverages by Nigerians. Nigeria cultivate cocoa beans and export it to Japan who supply them with electronic goods.