Incomplete specialization
Imagine that the self-sufficiency scenario changes, and both countries start devoting 50% of their time to producing each good. Self-sufficiency production would be as follows:
Self-sufficiency: 50/50 split
| Wine | Cloth | |
|---|---|---|
| Portugal | 500 | 1,000 |
| England | 625 | 1,875 |
| Total | 1,125 | 2,875 |
Recall the total production produced by Portugal and England under complete specialization:
Complete specialization
| Wine | Cloth | |
|---|---|---|
| Portugal | 1,000 | 0 |
| England | 0 | 3,750 |
| Total | 1,000 | 3,750 |
Exercise
How does total output compare under this new self-sufficiency scenario (Portugal 50% wine production and England 50% wine production) and complete specialization?
- Total wine output is higher under self-sufficiency. 1,000 bottles of wine are produced with complete specialization and 1,125 bottles are produced under self-sufficency. The opposite is true for cloth production. Self-sufficiency yields a total cloth production of 2,875 meters, which is less than the 3,750 meters produced under complete specialization.
- Total wine output is higher under self-sufficiency. 1,000 bottles of wine are produced with complete specialization and 1,125 bottles are produced under self-sufficency. The opposite is true for cloth production. Self-sufficiency yields a total cloth production of 2,875 meters, which is less than the 3,750 meters produced under complete specialization.
- Total wine output is higher under self-sufficiency. 1,000 bottles of wine are produced with complete specialization and 1,125 bottles are produced under self-sufficency. The opposite is true for cloth production. Self-sufficiency yields a total cloth production of 2,875 meters, which is less than the 3,750 meters produced under complete specialization.
- Total wine output is higher under self-sufficiency. 1,000 bottles of wine are produced with complete specialization and 1,125 bottles are produced under self-sufficency. The opposite is true for cloth production. Self-sufficiency yields a total cloth production of 2,875 meters, which is less than the 3,750 meters produced under complete specialization.
- Total wine output is higher under self-sufficiency. 1,000 bottles of wine are produced with complete specialization and 1,125 bottles are produced under self-sufficency. The opposite is true for cloth production. Self-sufficiency yields a total cloth production of 2,875 meters, which is less than the 3,750 meters produced under complete specialization.
Note that in this example there is insufficient global wine production under complete specialization, as compared to self-sufficiency. In this situation, incomplete specialization will make it possible to increase the total output of both goods if the countries split their efforts strategically.
For the economy’s total output to be greater under specialization as compared to self-sufficiency — in other words, to produce at least 1,125 bottles of wine and 2,875 meters of cloth in total, both countries will still specialize in the good for which they have a comparative advantage, but not completely, since England will also devote a share of its labor to wine production. This is an example of incomplete specialization.
Exercise
Use the table to find which of the following shares of labor devoted to wine and cloth for each country increase total output for both goods compared to the self-sufficiency scenario with both countries devoting 50% of their labor to each good.
Adjustable Shares
- Try entering the shares into the table above. Compare the total wine and cloth production in each scenario to the total output under self-sufficiency, which is 1,125 bottles of wine and 2,875 meters of cloth. You will find that both the first and third option are correct.
- Try entering the shares into the table above. Compare the total wine and cloth production in each scenario to the total output under self-sufficiency, which is 1,125 bottles of wine and 2,875 meters of cloth. You will find that both the first and third option are correct.
- Try entering the shares into the table above. Compare the total wine and cloth production in each scenario to the total output under self-sufficiency, which is 1,125 bottles of wine and 2,875 meters of cloth. You will find that both the first and third option are correct.
- Try entering the shares into the table above. Compare the total wine and cloth production in each scenario to the total output under self-sufficiency, which is 1,125 bottles of wine and 2,875 meters of cloth. You will find that both the first and third option are correct.