Exhibit 2-9

-Refer to Exhibit 2-9.If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond his PPF.
A) Alex, but not Adam,
B) Adam, but not Alex
C) Alex and Adam
D) neither Alex nor Adam

Question

Exhibit 2-9
 
-Refer to Exhibit 2-9.If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond his PPF.
A) Alex, but not Adam, 
B) Adam, but not Alex 
C) Alex and Adam 
D) neither Alex nor Adam

Quizplus · Accepted Answer

As both Alex and Adam specialize in the good in which they have a comparative advantage, they can produce at a lower opportunity cost, leading to an increase in total output. By engaging in trade, they can exchange the surplus production and consume a combination of goods that lies beyond their individual PPF. Therefore, both Alex and Adam can benefit from trade.

Exhibit 2-9 -Refer to Exhibit 2-9.If Alex and Adam Each Specialize in Adam