Specialization and Exchange, Division of Labour

Specialization and exchange

Problem of scarcity can be addressed by specialization.

Specialization = the concentration by worker or workers, firm, region or whole economy on a narrow range of goods and services.

Exchange = the process by which goods and services are traded.

Specialization produces a range of benefits to both countries involved in exchange:

• An increase in the amount of goods and services produced.
• Exchange between developed and developing countries.
• A widening of the range of goods that are avaliable in an economy.

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