Specialization and trade:
A) increase the costs of production because of decreased output.
B) decrease the per-unit costs of production because of economies of scale associated with large-scale production.
C) create diseconomies of scale, raising the per-unit costs of production.
D) only work within countries, not across countries.

Question

Quizplus · Accepted Answer

Specialization and trade allow for economies of scale by producing goods in larger quantities, which lowers the per-unit production cost. This is because the production process becomes more efficient with the repetition of a single task. Therefore, specialization and trade lead to lower production costs and higher efficiency in the long run, making them beneficial for businesses and countries.

Specialization and Trade