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?
A. Each party cannot benefit from specialization.
B. Specialization can only benefit those who have something to trade.
C. The richer country will take advantage of the poorer country when it comes to trade.
D. Both countries that use specialization can benefit from trade because they can meet needs and then trade the rest.

Answer 1

D! Countries that specialize benefit from trading with each other. Since countries produce goods they have a competitive advantage in, this allows them to make the best use of their time and resources.

Answer 2

The third time is correct (D).

Each country has its peculiarities, its productive structure, natural resources and different human capital. Thus, each country can specialize in what has a comparative advantage of production, that is, in what it produces more efficiently than other countries.

If each country specializes in what it produces most efficiently, both can benefit from trade by exporting the produced product efficiently and by importing the products whose production efficiency is greatest in another country.