O Levels Economics (2281)•2281/11/M/J/24

Explanation
National Specialization Boosts Efficiency Through Scale
Steps:
- Identify the question: Focus on advantages of national-level specialization in production.
- Recall specialization: Countries focus on goods they produce efficiently, trading for others.
- Link to economics: Specialization increases output volume, enabling cost reductions.
- Evaluate options: Select the one describing a benefit, not a drawback.
Why D is correct:
- Economies of scale define lower average costs from higher production volumes, as fixed costs spread over more units (e.g., Average Cost = Total Cost / Quantity).
Why the others are wrong:
- A: Creates reliance on imports, increasing vulnerability to supply disruptions.
- B: Exposes the firm to international rivals, potentially eroding market share.
- C: Accelerates resource use in the specialized sector, leading to environmental strain.
Final answer: D
Topic: International specialisation
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