In the real world we don't observe countries completely specialising 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 globalisation.
D)production of most goods involves increasing opportunity costs.

Question

Quizplus · Accepted Answer

Production of most goods involves increasing opportunity costs, which means that as a country specializes in the production of a good in which it has a comparative advantage, the opportunity cost of producing that good increases. This makes it less efficient for a country to specialize completely in producing only the goods in which it has a comparative advantage. Additionally, countries often have diverse resources and preferences, making it difficult to completely specialize in one or a few goods.

In the Real World We Don't Observe Countries Completely Specialising