Statement 1: A society in which everyone is self-sufficient will generally have a higher standard of...

Statement 1: A society in which everyone is self-sufficient will generally have a higher standard of living than one in which everyone specializes in a particular type of work.

Statement 2: People can specialize only if there is a well-developed system of exchange.

Statement 1 is true and Statement 2 is false.

Statement 2 is true and Statement 1 is false.

Both statements are true.

Both statements are false.

Solutions

Expert Solution

Answer : The answer is option B.

Statement 1 : False.

If in a society where everyone is self sufficient then some peoples' income may be higher than the rest peoples' income of the society. But if in a society where everyone is specialized for a particular work then all of them can work together. As a result the production level of the society increase for a particular product because of specialization. Because of higher productivity people earn more in specialized society. And due to higher income in specialized society the standard of living is higher in specialized society than the society where peoples are self sufficient. Therefore, the statement 1 is false.

Statement 2 : True.

Peoples requires many products for their living purpose. Now if a group of peoples are specialized for a particular product then they produce more of that product. At the same time another group produce more of another product in which that group is specialized. After production both groups exchange their products based on their needs. But if exchange system does not exist then there is no value of specialization. Hence, a well developed exchange system is required for specialization. Therefore, statement 2 is true.

Rahul Sunny answered 1 year ago

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