Refer to the above diagrams.The solid lines are production possibilities curves; the dashed lines are trading possibilities curves.The trading possibilities curves imply that:

Question

Quizplus · Accepted Answer

The trading possibilities curves show that both countries can benefit from specialization and trade in accordance with comparative advantage. This means that each country can produce the goods they are relatively more efficient at producing, and then trade with the other country to obtain the goods they are relatively less efficient at producing. As a result, world resources will be allocated more efficiently and both countries can be better off as a result of international specialization and trade.

Refer to the Above Diagrams