A nation that gains from trade will find its consumption point being located:
A) Inside its production possibilities curve
B) Along its production possibilities curve
C) Outside its production possibilities curve
D) None of the above

Question

Quizplus · Accepted Answer

When a nation engages in trade, it is able to consume more goods than it would be able to produce on its own. Therefore, its consumption point will be located outside its production possibilities curve. This is because it can use the resources it specialized in producing to trade for goods that it does not produce as efficiently, leading to a higher overall level of consumption.

A Nation That Gains from Trade Will Find Its Consumption