If a country's P_X/P_Y in autarky is less than the P_X/P_Y on the world market, then this country has a comparative advantage in the __________ good, and, if the country now engages in international trade and moves along its production-possibilities frontier, its
Production of the X good will __________.

Question

Quizplus · Accepted Answer

If a country's P_X/P_Y in autarky is less than the P_X/P_Y on the world market, it means that the country is relatively more efficient in producing the X good compared to the Y good. Therefore, the country has a comparative advantage in producing the X good. If the country engages in international trade and specializes in producing and exporting the X good, its production of the X good will increase, and the production of the Y good will decrease. Therefore, the correct answer is D.

If a Country's PX/PY in Autarky Is Less Than the PX/PY

If a Country's P_X/P_Y in Autarky Is Less Than the P_X/P_Y