The option chosen is that repayment of the loan would take place after a year, in other words, after 1 year the borrower would repay the principal plus the interest that has accrued on the loan over the one year period.
1 year interest on loan=principal*interest rate
1 year interest on loan=$200*8.5%
1 year interest on loan=$ 17
total amount due in one year=$200+$17=$217
Alternatively, we can determine the worth of the loan after one year using the future value formula as shown thus:
Specialization is where an individual, firm or country is skilled at producing a product. Producers engaging in specialization would reduce their costs as they would find an easier, quicker and more efficient way to complete the production of the good in less time.