If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then
A) each will produce a combination of goods that is within her/his production possibility frontier.
B) they will lose because they are no longer able to produce and consume both goods.
C) each will gain because each can consume a combination of goods that is outside her/his production possibility frontier.
D) one of them will gain and the other will lose.

Question

Quizplus · Accepted Answer

Specializing in the production of goods in which they have a comparative advantage and then exchanging those goods allows both parties to consume a combination of goods that they would not be able to produce on their own, effectively moving their consumption possibilities outside their individual production possibility frontiers.

If Tom and Di Specialize in Producing the Goods in Which