Which of the following would not result from all countries specializing according to the principle of comparative advantage?
A)The size of the economic pie would increase.
B)Worldwide production of goods and services would increase.
C)The well-being of citizens in each country would be enhanced.
D)Each country's production possibilities frontier would shift inward.

Question

Quizplus · Accepted Answer

According to the principle of comparative advantage, each country specializes in producing the goods and services for which it has the lowest opportunity cost. This results in an increase in worldwide production and an increase in the size of the economic pie, which enhances the well-being of citizens in each country. However, there is no reason why each country's production possibilities frontier would shift inward as a result of specialization according to comparative advantage. In fact, specialization should allow each country to produce more efficiently and shift its production possibilities frontier outward.

Which of the Following Would Not Result from All Countries