Question

Why would a firm choose to specialize in one specific good or service rather than a broader class of goods or services? A firm that specializes will employ more workers and grow faster than firms that are less narrowly focused. The specializing firm will be able to more quickly change the focus of production to respond to changing markets. A lower number of competing firms enables the specializing firm to get higher prices for the specific good or service. Specializing firms are more attractive to investors because they are more likely to survive technological advances.

Answer 1

The firm usually chose the specialized service or good instead of going for the much broader approach of selecting services and goods.

This is due to the fact that the this will allow them to quickly change their specific focus to the production in case there are some changes in the market.