The Principle of Comparative Advantage States That Specialization Increases Productivity

question 93

Multiple Choice

The principle of comparative advantage states that specialization increases productivity, but the principle of increasing opportunity costs states that, when you increase production of a single good, you must use increasingly costly resources. These two principles:

• A) are evidence that economic theory is internally inconsistent.
• B) are an example of the difference between abstract models and the real world.
• C) cannot be true at the same time.
• D) together account for the outward bow shape of production possibility curves.

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