ECO 1104 Chapter 3: Chapter 3

The production possibilities frontier provides an illustration of the principle that

a. trade can make everyone better off.

b. governments can sometimes improve market outcomes.

c. people face trade-offs.

d. people respond to incentives.

The principle that "trade can make everyone better off" applies to interactions and trade between:

Trade can make everybody better off because it

a. requires some workers in an economy to be retrained. 

b. reduces competition among domestic companies. 

c. increases cooperation among nations.

d. allows people to specialize according to comparative advantage.