Use the following to answer questions:
Figure: Computers and Books
-(Figure: Computers and Books) According to the figure, if country A produces only the good for which it has a comparative advantage and then consumes the other good by exchanging computers for books, then:
A) country A will consume outside its PPF but country B will consume inside its PPF.
B) country A will consume inside its PPF but country B will consume outside its PPF.
C) both countries will consume inside their own PPFs.
D) both countries will consume outside their own PPFs.

Question

Use the following to answer questions:
Figure: Computers and Books 
-(Figure: Computers and Books) According to the figure, if country A produces only the good for which it has a comparative advantage and then consumes the other good by exchanging computers for books, then:
A) country A will consume outside its PPF but country B will consume inside its PPF. 
B) country A will consume inside its PPF but country B will consume outside its PPF. 
C) both countries will consume inside their own PPFs. 
D) both countries will consume outside their own PPFs.

Quizplus · Accepted Answer

When countries specialize in the production of goods for which they have a comparative advantage and trade, they can consume beyond their production possibilities frontier (PPF), allowing both countries to consume outside their own PPFs.

Use the Following to Answer Questions