Question:
International trade permits a country to
(1) produce and consume beyond its production possibilities boundary.
(2) shift its production possibilities boundary outward.
(3) lower the per-unit production costs of all goods which is producing.
(4) expand its production possibilities while holding constant its consumption possibilities.
(5) consume beyond its production possibilities boundary.
Correct Answer:
(5)
Answer Explanation:
A country cannot produce beyond its own Production Possibilities Curve (PPC) without gaining new resources or technology. However, by specializing in their comparative advantage and trading with other nations, a country can import goods to consume at a point outside its domestic PPC boundary.
Topic: International Trade Year: 2017
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