Question

For what two reasons do countries specialize? Countries specialize so that opportunity costs can be increased. Countries specialize to excel in the production of specific goods and services. Countries specialize to make the most efficient use of their unique set of resources. Countries specialize to increase the number of their imported products.

Answer 1

Answer:

Countries specialize to excel in the production of specific goods and services;   Countries specialize to make the most efficient use of their unique set of resources.

Explanation:

Countries specialise to increase total gains from trade & specialisation

• They specialise if they have absolute advantage in production of a good, in terms of their capability to produce a good at lower cost.
• They specialise if they have comparative advantage in production of a good, in terms of their capacity to produce a good at a lower opportunity cost (less other goods sacrifised)
• They specialise if the advantage in producing a good is due to the product using their abundant factor (resource) intensively.

Answer 2

Answer:

B and C.

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