Asked by Ahmed El Shamlol on May 27, 2024

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Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

A) a rightward (outward) shift of the production possibilities curve.
B) increasing opportunity costs.
C) achieving points beyond the production possibilities curve through international specialization and trade.
D) productive efficiency.

Capital Goods

Long-term assets such as machinery, buildings, and equipment purchased by companies to produce goods and services.

Consumer Goods

Consumer goods are products bought by individuals or households for personal use, such as clothing, food, and household items.

International Specialization

The practice of countries focusing on the production of goods and services for which they have a comparative advantage, leading to trade.

  • Understand the concept of opportunity cost and its application in domestic and international trade.
  • Understand the conditions under which an economy can achieve points beyond its production possibilities curve through international trade.
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ZK
Zybrea KnightJun 03, 2024
Final Answer :
C
Explanation :
This scenario illustrates the benefits of international specialization and trade. Scoobania can obtain 1 unit of capital goods by sacrificing only 1 unit of consumer goods through trade with another country, which is more efficient than sacrificing 2 units domestically. This allows Scoobania to produce beyond its domestic production possibilities curve and achieve points that would not be possible otherwise. Therefore, the correct answer is C - achieving points beyond the production possibilities curve through international specialization and trade.