Final answer:
By specializing in special orders, a business can attract niche customers. This specialization, based on the principle of comparative advantage, can lead to more effective production and a unique selling proposition that draws customers in for their unique needs. Option A is correct.
Step-by-step explanation:
By becoming an expert at special orders, a business may benefit by attracting niche customers. Specialization allows businesses to focus on parts of the production process where they have an advantage, according to the idea of comparative advantage.
When businesses specialize, they are more effective and can produce higher quality offerings or more efficient services. This draws customers looking for specialized products or services, increasing the likelihood of customer loyalty due to the unique offerings that competitors may not provide.
Competition from firms with better or cheaper products can indeed reduce a business's profits and can drive some businesses out of business leading to loss of income or jobs. However, by specializing, the coffee shop will produce more and make more money, similarly to the way countries gain from trading what they can make more efficiently.
It allows the business to enhance their unique selling proposition by catering to the specific needs of its customers through product customization, which generally does not lower profit margins or reduce product customization.