📚 Learning Guide
Calculating Opportunity Costs
hard

When considering opportunity costs, it is accurate to state that if two individuals specialize based on their comparative advantages, the total production of goods will always increase, irrespective of the opportunity costs involved.

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A

True

B

False

Understanding the Answer

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Answer

When we talk about opportunity costs, we consider what each person gives up when they choose to focus on one task instead of another. If two individuals specialize in what they do best—meaning they have different strengths—they can work together to produce more goods than if they both tried to do everything. For example, if one person is really good at making bread and the other is great at making cheese, by specializing, they can create more bread and cheese together than if they both tried to make both. This is because they are using their time and skills more efficiently, leading to increased total production. Therefore, it's accurate to say that specialization based on comparative advantage generally leads to better outcomes, regardless of the specific opportunity costs involved.

Detailed Explanation

It's not always true that total production increases. Other options are incorrect because This answer suggests that specialization always leads to more production.

Key Concepts

Opportunity Costs
Comparative Advantage
Specialization
Topic

Calculating Opportunity Costs

Difficulty

hard level question

Cognitive Level

understand

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