Question

Nations specialize when they _____.

A. Have few natural resources and are required to endure a trade deficit.
B. Export more than they import.
C. Import more than they export.
D. Produce certain goods and services more efficiently than other nations.

Answer 1

The correct answer is D.

Specialization at the state level consists on dedicating the economic efforts and resources to the production of an specific product. There is a learning process attached to specialization, because it allows to achieve important productivy gains due to the broad experience acquired in that specific manufactuing process.

Such nation will end up gaining a competitive advantage, as it will be able to produce at a lower cost and therefore, be more efficiently than others.

Answer 2

d. produce certain goods and services more efficiently than other nations