Final answer:
Specialization of labor requires the existence of trade and markets, as workers depend on using their earnings to purchase goods and services. Specialized workers gain efficiency and produce higher quality results but must buy what they don't produce.
Step-by-step explanation:
For specialization of labor to occur, certain conditions must be met. One key condition is the existence of trade and markets. When workers specialize, they become more skilled at their specific tasks, which can lead to increased productivity and higher quality output. However, since specialized workers focus on a narrow range of activities, they rely on the ability to purchase goods and services that they do not produce themselves. Thus, they must be able to trade their labor for a salary that can buy these other goods and services from others who have also specialized.
Specialization can also drive innovation, as specialized workers often find new ways to improve their work, leading to further increases in efficiency and productivity.