Equilibrium production and consumption is changed by a country's decision to

Question

Quizplus · Accepted Answer

When a country specializes in the production of a good in which it has a comparative advantage, it can produce more efficiently than other countries and thus can produce the good at a lower opportunity cost. This allows the country to trade the good for another good in which it has a comparative disadvantage, obtaining more of that good than it could have produced on its own. This change in production and consumption alters the equilibrium in the market for both goods, leading to new prices and quantities. Therefore, Option B is the correct choice.

Equilibrium Production and Consumption Is Changed by a Country's Decision