A country gains from international trade when its post-trade consumption point
A) lies outside its production possibilities curve
B) lies along its production possibilities curve
C) lies inside its production possibilities curve
D) any of the above

Question

Quizplus · Accepted Answer

If a country's post-trade consumption point lies outside its production possibilities curve, it means that it is able to consume a combination of goods that it cannot produce by itself. This implies that the country is benefiting from international trade by importing goods that it cannot efficiently produce and exporting goods that it can produce efficiently. Therefore, A is the best choice.

A Country Gains from International Trade When Its Post-Trade Consumption