The assumption of constant costs of production in the Classical model results in a __________ production possibilities frontier, and, in the case of a "small" country, __________ specialization in production when trade takes place.
A) linear; incomplete
B) concave-to-the-origin; complete
C) convex-to-the-origin; incomplete
D) linear; complete

Question

Quizplus · Accepted Answer

The assumption of constant costs of production in the Classical model leads to a linear production possibilities frontier because it implies that the opportunity cost of producing one good over another remains constant. In the case of a "small" country, this model predicts complete specialization in the production of the good for which the country has a comparative advantage when trade takes place, as it can trade for other goods more efficiently than producing them domestically.

The Assumption of Constant Costs of Production in the Classical