Which of the following is true of international trade?
A)Trade makes it possible to consume better quality goods at a high price.
B)Trade makes the domestic producers of import substitutes better off.
C)Trade makes it possible to consume outside of the production possibility frontier.
D)In the absence of trade,a country always produces at a point below the production possibility frontier.

Question

Quizplus · Accepted Answer

International trade makes it possible to consume beyond a country's production possibility frontier by allowing for specialization and exchange between countries. This leads to greater efficiency and a wider range of goods available for consumption. Choices A and B are incorrect as trade can lead to both higher and lower quality goods being consumed, and may harm domestic producers of import substitutes. Choice D is incorrect as a country can produce at a point on or above its production possibility frontier in the absence of trade.

Which of the Following Is True of International Trade