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Nation’s production possibilities curve

Suppose that, based on a nation’s production possibilities curve, for 10,000 pizzas domestically an economy must sacrifice to get the one additional industrial robot it desires, but can get that robot from another country in exchange for 9,000 pizzas. To the following statement relate this information “Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus ‘get outside its production possibilities curve.’”

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The message of the production possibilities curve is that an individual nation is limited to the combinations of output indicated by its production possibilities curve. International specialization means directing domestic resources to output which a nation is highly efficient at producing. International trade involves the exchange of these goods for goods produced abroad.  Specialization and trade have the same effect as having more and better resources or discovering improved production techniques. The output gains from greater international specialization and trade are the equivalent of economic growth.

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