Improvements in productivity may lead to decreasing comparative costs if
A) The assumption of fixed technologies under constant costs is relaxed
B) Technologies available to each nation is allowed to differ
C) Resource endowments are allowed to vary
D) All of the above

Question

Quizplus · Accepted Answer

All of the above are factors that can lead to decreasing comparative costs. Relaxing the assumption of fixed technologies allows for improvements and advancements in technology, which can lead to lower costs. Allowing for different technologies available to each nation can also lead to lower costs through specialization and trade. Finally, allowing for variation in resource endowments can lead to more efficient use of resources, potentially leading to lower costs.

Improvements in Productivity May Lead to Decreasing Comparative Costs If