Specialization usually increases the output of a country; however effective specialization requires:
A) everyone in the country producing the same thing.
B) that workers have very similar skills.
C) an effective low-cost means to exchange goods and services.
D) a large stock of capital.

Question

Quizplus · Accepted Answer

Specialization allows countries to focus on producing goods and services that they are most efficient at, which increases productivity and output. However, for effective specialization to occur, these goods and services need to be exchanged at a low cost. This requires an efficient means of trade, such as a developed transportation infrastructure, communication technology, or trade policies that allow for easy exchange of goods and services. Therefore, choice C is the best answer.

Choice A is incorrect because having everyone produce the same thing would not lead to effective specialization but would lead to a lack of diversity in the economy.

Choice B is incorrect because while workers with similar skills may facilitate specialization, it is not a necessary condition for specialization to occur.

Choice D is incorrect because while having a large stock of capital may facilitate specialization, it is not a necessary condition for specialization to occur.

Specialization Usually Increases the Output of a Country; However Effective