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Why does specialization require people to exchange?

User Joey Morgan
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1 Answer

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Specialization based on comparative advantage, most people consume very little that they produce and produce very little of what they consume. Thus, in order to meet their requirements, people are required to exchange their produce for what they want to consume. Thus specialization necessitates exchange.

The commodity which is imported is produced in surplus in another nation. Therefore an exchange of commodities and services takes place between nations when specialization occurs.

User Walter Heck
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