To achieve gains from trade, a country

Question

Quizplus · Accepted Answer

Specializing in producing a good in which it has a lower opportunity cost allows a country to produce more efficiently and effectively, bringing its production point closer to the PPF frontier and increasing the total output. This allows for gains from trade with other countries that specialize in producing other goods in which they have a lower opportunity cost. The other options are incorrect as producing beyond the PPF (B) is not feasible, having an absolute advantage in all goods (E) is rare, and producing at the midpoint of the PPF (D) does not take into account a country's comparative advantage.

To Achieve Gains from Trade, a Country