If an economy insists on remaining completely self-sufficient and isolated from the rest of the world and it is already producing as efficiently as possible, it can raise the welfare of its citizens only by
A) specializing according to its comparative advantage.
B) increasing the amount of productive resources, perhaps by investing and increasing its capital stock.
C) improving its level of technology so that it can convert the same amount of inputs into a greater amount of output.
D) All of the above.
E) b and c above.

Question

Quizplus · Accepted Answer

Since the economy is isolated, it cannot specialize according to its comparative advantage with other countries (eliminating A and D). Increasing productive resources or improving technology are viable ways to enhance welfare under these conditions.

If an Economy Insists on Remaining Completely Self-Sufficient and Isolated