Suppose the country of Maverick has specialized in the production of a good but has not yet entered into trade. At this point in time, Maverick has
A. Moved to a level of production outside its production possibilities curve.
B. Shifted its production possibilities curve outward.
C. Moved along its existing production possibilities curve.
D. Moved to a level of consumption outside its production possibilities curve.
Moved along its existing production possibilities curve
To determine the correct answer, we need to understand the concept of a production possibilities curve (PPC). A PPC shows the different combinations of goods and services that an economy can produce with its given resources and technology. It represents the maximum output possible given the available resources.
In the scenario provided, Maverick has not yet entered into trade but has specialized in the production of a good. This means that Maverick is using its resources and technology efficiently to produce that particular good.
Now, let's analyze the options:
A. Moved to a level of production outside its production possibilities curve.
If Maverick is still operating within its production possibilities curve, it means it is utilizing its resources efficiently and producing quantities consistent with its current capabilities. Thus, this option is not applicable.
B. Shifted its production possibilities curve outward.
If Maverick has specialized in the production of a good, it implies a more efficient allocation of resources and improved technology. This can lead to an increase in productivity and a shift of the entire production possibilities curve outward. Hence, this option is a possibility.
C. Moved along its existing production possibilities curve.
Since Maverick has specialized in the production of a good, it is likely that it is operating at the maximum potential of its existing resources and technology. Thus, it is not merely moving along the curve, but rather reaching its maximum potential. However, this option does not explicitly imply specialization, so it may not be the best answer.
D. Moved to a level of consumption outside its production possibilities curve.
Consumption is determined by the level of production. If Maverick is producing efficiently and utilizing its resources effectively, it will be consuming at a level consistent with its production possibilities curve. So, this option is not relevant in this scenario.
Based on these considerations, option B. Shifted its production possibilities curve outward seems to be the most fitting answer as the specialization in production would likely lead to increased efficiency and improved technology, resulting in an outward shift of the production possibilities curve.