Asked by Germanee Foster on May 05, 2024
Verified
If two nations specialize according to their respective comparative advantage, and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.
Production Possibilities Curves
A graphical representation that shows the maximum number of goods or services that can be produced with limited resources.
- Learn about the principle of comparative advantage and what it means for worldwide trade.
- Acknowledge the significance of opportunity costs in shaping specialization and trade arrangements.
Verified Answer
SD
sylvester davisMay 09, 2024
Final Answer :
True
Explanation :
This is the basic principle of comparative advantage and gains from trade. By specializing in what they are most efficient in producing, both nations can increase their overall production and trade with each other to consume more output than they could produce on their own.
Learning Objectives
- Learn about the principle of comparative advantage and what it means for worldwide trade.
- Acknowledge the significance of opportunity costs in shaping specialization and trade arrangements.
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