A free market can allocate production across two farms to minimize total costs even when an ideal central planner could not.

Question

Quizplus · Accepted Answer

This is based on the concept of comparative advantage, where each farm specializes in producing the good or service that they can produce at a lower opportunity cost than the other farm. This leads to a more efficient allocation of resources and lower total costs compared to a central planner trying to allocate production without this knowledge of comparative advantage.

A Free Market Can Allocate Production Across Two Farms to Minimize