Question

A nation engaging in trade according to the Ricardian model will find its consumption bundle A) inside its production possibilities frontier. B) on its production possibilities frontier. C) outside its production possibilities frontier. D) inside its trade-partner's production possibilities frontier. E) on its trade-partner's production possibilities frontier.

Answer 1

c) Outside its production possibilities frontier

Step-by-step explanation:

The Ricardian model of trade highlights on the fact that trade is beneficial for all the countries involved in international trade. It also suggests that even countries with less advanced technology or resources are going to be benefit from international trading. Remember that a consumption bundle is a set of goods that a consumer may choose to consume.

Since the Ricardian model of trade is based in international trade, nations engaging in this trades will find its consumption bundle outside its production possibilities frontier (in another partner country)

Thus, the correct answer is C)