Question

A society in which the producers in the economy specialize will have a greater production potential than a society without specialization. List and explain the three things that specialization does to increase production. (15 points)

Answer 1

Specialization helps in many ways and countries which specialize in production of things often end up having a positive balance of payment and a current account surplus.

The ways in which specialization helps to increase production are described below:

1) Increased production: In any economy where the producers are specialized, there is a significant increase in the quantity of the goods and services produced as compared to the society where specialization does not take place. Ultimately resulting in more exports and less imports.

2) Economies of scale: Increased specialization means that there is efficiency and less wastage of resources, hence resulting in economies of scale which means that the average cost per unit of making any product will decrease, which will result in more profit and more efficiency.

3) Improved quality of goods and services: Increased specialization means that the workers involved in producing goods are effective and efficient, which results in the overall improvement in quality of the goods and services produced in any country.

Hope this clears things up. Good luck buddy.