With increasing opportunity costs, a nation totally specializes in the production of the commodity of its comparative advantage; with constant opportunity costs, a nation partially specializes in the production of the commodity of its comparative advantage.

Question

Quizplus · Accepted Answer

With increasing opportunity costs, a nation may not fully specialize in the production of the commodity of its comparative advantage because the cost of reallocating resources becomes too high. With constant opportunity costs, a nation is more likely to fully specialize in the production of the commodity of its comparative advantage, as the cost of reallocating resources does not increase.

With Increasing Opportunity Costs, a Nation Totally Specializes in the Production