It is more efficient for the lawyer to specialize in practicing law, and let the secretary do the typing. It pays to specialize whenever opportunity costs are different. Two parties can specialize and then trade, which makes both parties better off. Even if one person or nation does something more efficiently than another in the production of a good or service, it does not mean than that person or nation should produce that good or service. Specialization occurs as a result of comparative , not absolute, advantage .
Specialization according to comparative advantage minimizes opportunity costs.
If both parties specialize according to comparative advantage, trading enables them to acquire more of the goods and services the wants. Economic Resource Links Copyright Houghton Mifflin Company . All Rights Reserved.