Substrate Record: qid 7494

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qid 7494 · economics

Question: Which of the following statements is true of production possibility curves and trade between nations?

1. Domestic industries should be protected to ensure nations stay within their production possibility curve.
2. The flow of goods and services is based on the principle of absolute advantage.
3. Nations can consume at points beyond the production possibility curve by protecting domestic industries from free trade.
4. Trade between nations does not affect the production possibility curve.
5. Nations should only trade when they have a comparative advantage in production.
6. Free trade restricts nations to consume within their production possibility curve.
7. The principle of comparative advantage is irrelevant in the context of international trade.
8. Nations specialize and trade based on absolute advantage in production.
9. Production possibility curves demonstrate that trade always results in absolute disadvantage.
10. Free trade allows each nation to consume beyond the production possibility curve.

Our answer: J. Free trade allows each nation to consume beyond the production possibility curve. Source quote machine-checked (exact quote)

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