Which situation best illustrates how global trade promotes specialization?A.A country tries to protect local businesses by stopping its citizens from buying foreign products.B.A country uses its own natural resources to produce all of the essential products its citizens need.C.A country focuses on producing luxury goods and imports most of its food instead of growing it.D.A country produces a huge variety of goods to try to export them to as many countries as possible.
Question
Which situation best illustrates how global trade promotes specialization?A.A country tries to protect local businesses by stopping its citizens from buying foreign products.B.A country uses its own natural resources to produce all of the essential products its citizens need.C.A country focuses on producing luxury goods and imports most of its food instead of growing it.D.A country produces a huge variety of goods to try to export them to as many countries as possible.
Solution
The situation that best illustrates how global trade promotes specialization is C. A country focuses on producing luxury goods and imports most of its food instead of growing it.
Here's why:
Global trade promotes specialization by allowing countries to focus on producing goods or services where they have a comparative advantage. A comparative advantage exists when a country can produce a good or service at a lower opportunity cost than other countries.
In option C, the country is specializing in the production of luxury goods, which presumably it has a comparative advantage in. It then trades these goods for food, which it does not specialize in. This is a clear example of how global trade can promote specialization.
Option A is about protectionism, not specialization. Option B is about self-sufficiency, not specialization. Option D is about diversification, not specialization. Therefore, these options do not illustrate how global trade promotes specialization.
Similar Questions
Countries often benefit from specializing in a certain product because specialization:A.allows them to focus on making one product as efficiently as possible.B.decreases the price of natural resources needed to make a product.C.prevents other countries from trying to make similar products.D.ensures that they will not have to rely on trade for essential products.
Which statement best illustrates an example of economic specialization?A.A country reduces its division of labor by encouraging all workers to develop many different skills.B.A country attempts to become self-sufficient by producing all the cars it needs on its own.C.A country promotes businesses that create many different products despite high opportunity costs.D.A country focuses on growing a specific type of crop for export instead of a wide variety of crops.
A country has a large number of highly advanced factories for producing cars. However, it does not have any sources of rubber to make wheels for the cars. Therefore, it has to import rubber from other countries. This situation best illustrates which factor that encourages global trade?A.Allowing for specializationB.Lowering opportunity costC.Acquiring natural resourcesD.Eliminating trade deficits
Specialization and trade allow a country toGroup of answer choicesproduce and consume on its production possibility frontier.produce and consume inside its production possibility frontier.produce and consume outside its production possibility frontier.produce on its production possibility frontier and consume outside it.
One of the major benefits of specialization is that:A.countries produce a much wider range of different goods.B.countries can focus on efficiently producing a small number of goods.C.countries become less reliant on voluntary exchange with others.D.countries are less likely to experience a division of labor.
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