Chapter 18, Problem 11AA

To determine

To explain: The benefits of specialization to a nation.

Explanation of Solution

A nation would benefit from specialization by producing that particular specialized commodity at a lower opportunity cost than any other country. This provides the benefit of comparative advantage to the country as a comparative advantage is when specific goods & services are produced with lower opportunity cost than other producers which helps them in selling the same product at a lower cost.

Specialization can be different depending upon the availability of that particular resource in the country that is a country with more labor would be producing goods that are more labor-intensive. On the other hand, a country with more capital would be producing goods that are capital intensive in nature and that would help the countries in gaining more from the international trade and specialization of the products.