If the opportunity cost of production rises as more of a good is produced,
A)the terms of trade will be independent of opportunity costs
B)the production possibilities curve will be a straight line
C)a country will specialize in producing only those goods in which it has a comparative advantage
D)a country should produce any good in which it has an absolute advantage
E)a country may not specialize completely in the goods in which it has comparative advantage

Question

Quizplus · Accepted Answer

As the opportunity cost of producing a good increases, a country may not fully specialize in that good, even if it has a comparative advantage, because the increasing opportunity cost makes it less efficient to continue specializing completely.

If the Opportunity Cost of Production Rises as More of a Good