ECONOMICS FILE 2.docx - UNIVERSITY OF CAPE COAST COLLEGE OF...

UNIVERSITY OF CAPE COAST
COLLEGE OF HUMANITIES AND
LEGAL STUDIES
SCHOOL OF BUSINESS
SCHOOL OF ECONOMICS
PRINCIPLES OF MICROECONOMICS
(ECO 103)
DR. BENEDICT AFFUL JR.
SB/PCM/21/0144

DOES SPECIALIZATION LEAD TO IMPROVED TRADE? JUSTIFY YOUR ANSWER
WHAT IS SPECIALIZATION IN ECONOMICS?
Specialization in economics is the process of an organization concentrating its labor and
resources on a certain type of production to be more efficient and create a comparative advantage
for an economy. By focusing on a particular activity, skill or process, specialization in the labor
force can increase productivity and expertise. Whether an individual concentrates on one
particular task or a company focuses on a particular product or service, specialization can be an
important aspect of gaining economic advantage within the market.
WHY IS SPECIALIZATION IMPORTANT IN BUSINESSOR TRADE?
Specialization allows an employee to use their background and experience to streamline
processes and increase sales. Specialization leads to quality work. Skills + focus = higher quality.
By specializing in one area, an employee can hone their skill, continually improving the quality
of their performance.
REASONS WHY SPECIALIZATION IS IMPORTANT IN ECONOMICS
Economic specialization may benefit organizations in a variety of industries. Here are some
reasons specialization can be important in economics:
Appealing to prospective customers
Economic specialization can help an organization appeal to a broader range of prospective
customers by illustrating mastery and in-depth knowledge of one specific product, service or
operational process. If a consumer is unsure which company to purchase from, they may be more
likely to select an organization that is the established expert in its field, rather than a business
that produces a variety of items. This means that specialization can help a company acquire new
customers by showing its commitment to understanding and working with a particular product
and industry.
Minimizing costs of product creation
Because economic specialization can increase efficiency and productivity, it may help an
organization minimize production costs. This is because if a company focuses on producing a
single item or part of a product, they may be able to increase their output, allowing them to
charge clients less per unit while selling at a higher volume and increasing their profit margin.