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.