Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 2 - The Market System and the Circular Flow - Questions: 4

Answer

The advantages of using capital in the production process are increased efficiency and a more abundant output. Division of labor refers to human specialization which is taking advantage of an individual's skills and abilities, devoting time to a single task, and avoiding lost time by avoiding shifting around on jobs. The advantages of specialization include using resources of an individual, business, or nation to produce goods/resources to exchange. Exchange is a necessary consequence of specialization because consumers produce basically none of the products they consume.

Work Step by Step

Capital provides workers such as farmers the ability to go through production using machines rather than his hands which would be inefficient and time-consuming. Exchange also gives producers the chance to barter their products/services for products/services they actually need and use.
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