A country's consumption possibilities frontier can be outside its production possibilities frontier if
A)the country's technology is superior to the technologies of other countries.
B)the citizens of the country have a greater desire to consume goods and services than do the citizens of other countries.
C)the country engages in trade.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The country's consumption possibilities frontier can be outside its production possibilities frontier if the country engages in trade. This is because trade allows a country to specialize in producing the goods and services in which they have a comparative advantage and then import the goods and services they cannot produce efficiently. As a result, the country can consume more goods and services than it could produce on its own. Superior technology and a greater desire to consume goods and services than other countries are not sufficient reasons on their own to have a consumption possibilities frontier outside of the production possibilities frontier.

A Country's Consumption Possibilities Frontier Can Be Outside Its Production