EXPLAIN HOW MONEY ENCOURAGES SPECALIZATION AND
LOW SPECIALIZATION IMPROVES EVERYONES STANDARDS
OF LIVING?
Money encourages specialization in that it makes
people specialize in skills that enable them to offer
services which they can charge more money. This is
why people specialize in different fields so as to be
able to offer services and earn more money.
Without money, individuals have to carry out barter
trade in order to exchange services and goods.
Barter trade requires a double coincidence of the
wants and this aspect makes it cumbersome to
specialize since one will be impelled to offer
services in which they are not best in order to get
something. However, when money is utilized,
individuals are free to actually specialize in the areas which they are best in (have a
comparative advantages), so as to earn more money.
Specialization improves the standard of living of everyone since if there are more
individuals who have expertise in certain fields, these individuals will be in a position of
helping others better than before. In fact, they will be capable of creating and investing
things which will make the lives of everyone more efficient and easier.