What are the advantages of using capital in the production process? What is meant by the term ""division of labor""? What are the advantages of specialization in the use of human and material resources? Explain why exchange is the necessary consequence of specialization.

Answer: First, the use of capital in the production process allows companies to increase their efficiency by producing more at a lower cost and creating a need in consumers for the consumer good. The division of labor is the fragmentation or decomposition of a productive activity in more elementary tasks, as well as its distribution among different people, according to their physical strength, ability and knowledge.

The advantages of specialization clearly are that each person has different skills in which they can specialize and learn more and in this way saves time and resources by making the work groups perform their tasks much faster.

The exchange is the necessary consequence of the specialization because for example each country will concentrate on producing what it is specialized in and is more efficient, therefore it will seek to exchange the rest of the products in which they are most ineffective.