Enables individuals to take advantage of existing

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enables individuals to take advantage of existing differences in theirabilities and skills. If LeBron is strong, athletic, and good at shooting abasketball and Beyoncé is beautiful, agile, and can sing, theirdistribution of talents can be most efficiently used if LeBron playsprofessional basketball while Beyoncé records songs and gives concerts.Specialization fosters learning by doing.Even if the abilities oftwo people are identical, specialization may still be advantageous. Bydevoting time to a single task, a person is more likely to develop the
skills required and to improve techniques than by working at a numberof different tasks. You learn to be a good lawyer by studying andpracticing law.Specialization saves time.By devoting time to a single task, aperson avoids the loss of time incurred in shifting from one job toanother. Also, time is saved by not “fumbling around” with tasks that oneis not trained to do.A rather obvious characteristic of any economic system is the extensiveuse of money. Money performs several functions, but first and foremost itis amedium of exchange. It makes trade easier.Although a market system promotes a high degree of efficiency in theuse of its resources, it has certain inherent shortcomings, called “marketfailures.” We will discover in subsequent chapters that governments canoften increase the overall effectiveness of a market system in severalways. That being said, governments have their own set of shortcomingsthat can themselves cause substantial misallocations of resources.Consequently, we will also investigate several types of “governmentfailure.”The key features of the market system help explain how market economiesrespond to five fundamental questions:What goods and services will be produced?How will the goods and services be produced?Who will get the goods and services?How will the system accommodate change?How will the system promote progress?

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