In the real world, we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.One reasons for this is
A)comparative advantage works better in theory than in practice.
B)some countries have more resources than other countries.
C)tastes for many traded goods are similar in many countries because of globalization.
D)production of most goods involves increasing opportunity costs.

Question

Quizplus · Accepted Answer

The production of most goods involves increasing opportunity costs, meaning that as a country specializes in the production of a certain good, the opportunity cost of producing that good increases over time. This makes it less efficient and less profitable for a country to specialize completely in one good, as they will eventually face diminishing returns and increasing costs. Therefore, most countries do not completely specialize in the production of goods for which they have a comparative advantage.

In the Real World, We Don't Observe Countries Completely Specializing