Question

When an economy relies on specialization, _______.

A. centralized coordination is needed to ensure that everyone obtains the goods they need.
B. there will be more efficiency in production, but there will be disruptions in the distribution of goods.
C. trade enables individuals to obtain the goods in which they do not have a specialization.
D. trade is established according to the value of the specialized product.

Answer 1

Answer:

The correct answer is letter "C": trade enables individuals to obtain the goods in which they do not have a specialization.

Explanation:

British economist David Ricardo (1772-1823) in his book "Principles of Political Economy" (1817) proposes countries should specialize in the production and export of products they are more efficient at. Then, those countries could obtain the products they are deficient in manufacturing importing them from more efficient nations. With this idea, Ricardo was establishing the basis of what is known today as "comparative advantage".