Question

If nations specialize according to their comparative advantage and engage in international trade with each other, each nation can


produce outside its production possibilities curve


a

consume outside its production possibilities curve


b

shift its production possibilities curve to the right


c

become more self-sufficient


d

produce more of all goods

Answer 1

b

Specialization and trade let a country consume beyond its production possibilities curve (PPC) by trading the good it produces relatively efficiently for other goods. Trade does not by itself shift the PPC or allow production beyond the PPC.