Structural Unemployment in International Specialization

Steps:

• Define international specialization: Countries focus production on goods they produce most efficiently, trading for others.
• Identify disadvantages: Examine impacts on domestic industries, employment, costs, and efficiency.
• Evaluate options: Match each to economic theory on trade benefits and drawbacks.
• Select best: Choose the option reflecting a clear negative outcome like job losses from competition.

Why B is correct:

• According to comparative advantage theory, specialization exposes domestic firms to global competition, making inefficient ones uncompetitive and causing structural unemployment as workers' skills mismatch new job needs.

Why the others are wrong:

• A: Specialization increases efficiency and trade, typically lowering consumer prices through comparative advantage.
• C: Imports from specialized production often reduce costs for domestic firms by providing cheaper inputs.
• D: International trade heightens competition, forcing domestic firms to allocate resources more efficiently.

Final answer: B