Asked by Ashleigh Petersen on May 16, 2024
Verified
Trade between countries
A) allows each country to consume at a point outside its production possibilities frontier.
B) limits a country's ability to produce goods and services on its own.
C) must benefit both countries equally; otherwise, trade is not mutually beneficial.
D) can best be understood by examining the countries' absolute advantages.
Production Possibilities Frontier
A graphical representation that shows the maximum number of possible goods and services that a country can produce given its resources and technology.
Absolute Advantages
The capacity of a country or entity to produce a good or service more efficiently than others, using the same amount of resources or less.
- Investigate how specializing according to comparative advantage influences a nation's production and consumption capacity.
- Recognize the situations that permit countries to gain advantages through commerce.
Verified Answer
BP
brooke priceMay 17, 2024
Final Answer :
A
Explanation :
Trade enables countries to specialize in the production of goods and services in which they have a comparative advantage, allowing them to consume beyond their production possibilities frontier. This does not necessarily mean trade limits a country's production capabilities (B), that benefits are always equal (C), or that absolute advantage is the best framework for understanding trade benefits (D), as comparative advantage is often more relevant.
Learning Objectives
- Investigate how specializing according to comparative advantage influences a nation's production and consumption capacity.
- Recognize the situations that permit countries to gain advantages through commerce.