Which benefit is the result of specialization?

Without money, trading specialised goods and services would be very difficult. Consumers and producers wouldn't get what they really need or want, as goods and services wouldn’t be exchanged for the right value. However, money eliminates this problem completely.

Specialisation is when we concentrate on a product or task

What is specialisation? - research question

Which benefit is the result of specialization?

Real-world examples of industries that make extensive use of division of labour:

  • Vehicle assembly
  • Construction industry
  • Smartphone assembly

Advantages from specialisation (division) of labour:

  • Higher productivity and efficiency – e.g. rising output per person hour
  • Lower unit costs leading to higher profits
  • Encourages investment in specific capital – economies of scale

Disadvantages from specialisation (division) of labour:

  • Risk of worker alienation
  • Risk of disruptions to production process
  • Risk of structural unemployment due to occupational immobility

Advantages for a country specializing in goods and services to trade

  • Allows a country to make full use of their economic resources
  • Increases the scale of production – leads to lower costs and prices
  • Surplus can be exported, an injection into the circular flow of income

Disadvantages for a country specializing in goods and services to trade

  • World prices for a product might fall leading to declining revenues
  • Risk of over-specializing and structural unemployment
  • Might lead to over-extraction of a country’s natural resources

Specialization is a method of production whereby an entity focuses on the production of a limited scope of goods to gain a greater degree of efficiency. Many countries, for example, specialize in producing the goods and services that are native to their part of the world, and they trade them for other goods and services.

This specialization is thus the basis of global trade, as few countries have enough production capacity to be completely self-sustaining.

Key Takeaways

  • Specialization in business involves focusing on one product or a limited scope of products so as to become more efficient.
  • Specialization can increase productivity and provide a comparative advantage for a firm or economy.
  • Microeconomic specialization involves the individual actors and economic components, and macroeconomic specialization involves the broad advantage an economy holds in production.



Understanding Specialization

Specialization is an agreement within a community, organization, or larger group in which each of the members best suited for a specific activity assumes responsibility for its successful execution.

Microeconomic Specialization

Specialization can occur on both the microeconomic level and the macroeconomic levels. At the individual level, specialization usually comes in the form of career or labor specialization. Each member of an organization or economy, for example, has a unique set of talents, abilities, skills, and interests that make her uniquely able to perform a set of tasks.

Labor specialization exploits these unique talents and places people in areas where they perform the best, helping both the individual, as well as the overall economy.

If, for example, a single individual excels at math but is not a proficient writer, it benefits both the individual and the community if she pursues a field that relies heavily on mathematics.

Using another example, specialization can even refer to the production capacity of an individual firm. When setting up a factory, an assembly line is organized to increase efficiency rather than producing the entire product at one production station.

Specialization involves focusing on a specific skill, activity, or production process, such as a South American company harvesting bananas, to become the leader or expert.

Macroeconomic Specialization

Economies that realize specialization have a comparative advantage in the production of a good or service. Comparative advantage refers to the ability to produce a good or service at a lower marginal cost and opportunity cost than another good or service.

When an economy can specialize in production, it benefits from international trade. If, for example, a country can produce bananas at a lower cost than oranges, it can choose to specialize and dedicate all its resources to the production of bananas, using some of them to trade for oranges.

Specialization also occurs within a country's borders, as is the case with the United States. For example, citrus goods grow better in the warmer climate of the South and West, many grain products come from the farms of the Midwest, and maple syrup comes from the maple trees of New England. All these areas focus on the production of these specific goods, and they trade or purchase other goods.

What are 2 benefits of specialization?

Advantages from specialisation (division) of labour:.
Higher productivity and efficiency – e.g. rising output per person hour..
Lower unit costs leading to higher profits..
Encourages investment in specific capital – economies of scale..

Are the result of gains from specialization?

The benefits of specialization include: a larger quantity of goods and services that can be produced, improved productivity, production beyond a nation's production possibility curve, and resources that can be used more efficiently. Specialization can also lead to comparative advantage.

What is the greatest benefit of specialization and trade?

Whenever countries have different opportunity costs in production they can benefit from specialization and trade. Benefits of specialization include greater economic efficiency, consumer benefits, and opportunities for growth for competitive sectors.

What are the 4 advantages of specialization?

Here are a few of the specific benefits associated with specialization:.
Better Value Proposition. ... .
Smaller Learning Curve. ... .
Higher Perception of Authority. ... .
Higher Conversions. ... .
Better Networking..