Specialization and Economic Interdependence

What is the primary benefit of the division of labor in an economy?

• It increases the variety of goods produced.

• It enhances worker productivity and efficiency.

• It reduces the need for skilled labor.

• It decreases the overall cost of production.

Which of the following best describes a global trade network?

• A system where countries produce all goods domestically.

• A network of trade routes used exclusively for luxury goods.

• An interconnected system of trade between countries that exchange goods and services.

• A network that limits trade to neighboring countries only.

According to the theory of comparative advantage, a country should:

• Produce goods for which it has the highest opportunity cost.

• Specialize in goods where it has a lower opportunity cost compared to other countries.

• Focus on producing goods that require the most resources.

• Avoid trading with countries that have similar resources.

How does specialization affect resource allocation in an economy?

• It leads to inefficient use of resources.

• It causes resources to be distributed equally among all sectors.

• It allows resources to be allocated to areas where they are most efficiently used.

• It results in a surplus of resources in all sectors.

Which of the following is a potential outcome of economic interdependence due to specialization?

• Decreased economic growth due to limited trade.

• Increased economic growth through access to a larger market and diverse resources.

• Complete self-sufficiency of individual countries.

• Reduction in the variety of goods available to consumers.