Question

What does the process of specialization do for an economy?

Answer 1

Specialization is the devotion of all an economies resources on goods and services they are costfully and resourcefully best suited at producing. In other words that economy is more allocatively efficient. The surplus of goods and services can then be traded to a country which does not have comparative advantage in the production in and vice versa, maximizing word production. Each country will benefit because they will consume and produce more of the goods and services (outside the PPF). Hence standards of living will rise and the economy experiences some growth overtime.