The Ricardian model (with constant opportunity costs) predicts that a nation will ______________ in the production of the good it exports.
A) have a comparative disadvantage
B) develop shortages
C) lower the cost of production
D) specialize completely

Question

Quizplus · Accepted Answer

According to the Ricardian model, a nation will specialize completely in the production of the good in which it has a comparative advantage, and only produce that good for export while importing all other goods. This is based on the assumption of constant opportunity costs, meaning that the resources needed to produce each good can be easily and fully transferred between the production of the two goods. By specializing completely, the nation is able to maximize its overall production and consumption efficiency.

The Ricardian Model (With Constant Opportunity Costs) Predicts That a Nation