What is specialisation in economic terms?

Specialisation in economic terms refers specifically to the concentration of production on certain goods or services that can be produced most efficiently. This allows individuals, businesses, or countries to focus their resources, skills, and efforts on areas where they have a comparative advantage or expertise. By doing so, they can increase their efficiency and productivity, leading to a higher output of goods or services.

When entities specialise, they can improve their processes, reduce production costs, and enhance the quality of the products they create. This is in contrast to diversification, which involves spreading resources across various products and may dilute efficiency. The other options relate to concepts that do not accurately define specialisation; for instance, increasing production indiscriminately suggests a lack of focus, while reducing costs by using fewer resources does not encompass the idea of concentrating efforts on specific areas of production.