Specialisation and trade

Question

Quizplus · Accepted Answer

Specialization and trade allow nations to consume combinations of products that are outside their individual production possibilities frontiers. By specializing in the production of goods and services that they have a comparative advantage in, nations can trade for goods and services that they may not be able to produce as efficiently. This allows them to consume more goods and services than they could produce on their own, therefore expanding the range of consumption possibilities beyond their production possibilities frontier.

Specialisation and Trade