Compared with constant cost production, if production occurs under increasing cost conditions, it is MORE likely that countries will:
A) completely specialize.
B) incompletely specialize.
C) not engage in international trade.
D) trade with one another.

Question

Quizplus · Accepted Answer

Under increasing cost conditions, countries will face higher costs as they continue to produce more of a good. This means that it may not be profitable or efficient for a country to completely specialize in one good. Instead, it may be more beneficial for the country to incompletely specialize and trade for goods that they have a comparative advantage in producing at a lower cost. Therefore, it is more likely that countries will incompletely specialize and engage in international trade.

Compared with Constant Cost Production, If Production Occurs Under Increasing