Differences in innate skills and the benefits associated with the division of labor result in
A) differences in productivity.
B) absolute advantage.
C) self-sufficiency.
D) diminishing returns.

Question

Quizplus · Accepted Answer

Innate skills (natural abilities) and the division of labor allow individuals to specialize in tasks that they are most productive at, which results in differences in productivity. This in turn leads to greater efficiency and output in the economy. Absolute advantage refers to the ability of a country to produce a certain good or service more efficiently than another country, which is related to, but not the same as, innate skills and division of labor. Self-sufficiency refers to a situation where a country is able to produce all goods and services that it needs without relying on trade with other countries, which is not directly related to innate skills or division of labor. Diminishing returns refers to a decrease in the marginal output or productivity of additional units of inputs (e.g. labor or capital) when the other inputs remain constant, which is not directly related to innate skills or division of labor.

Differences in Innate Skills and the Benefits Associated with the Division