According to the principle of comparative advantage, what would be the effect on the production possibilities frontier if countries specialized in the production of goods in which they have a comparative advantage?

Comparative advantage is an economic concept that states that a country should choose to produce and export goods or services in which it is relatively more efficient in producing compared to other goods and services. This implies that a country might have a lower opportunity cost of producing the good compared to another country. By specializing in the production of goods with the lowest opportunity cost, each country can improve its overall production efficiency, trade with each other, and gain benefits.

PPF is a graphical representation of the possible combinations of goods that can be produced by an economy given its limited resources and technology. The PPF curve shows the trade-offs between the production of two goods. The points on the curve represent the maximum production of one good, given the production of the other good. The points inside the curve represent the underutilization of resources, while points outside the curve are unattainable given existing resources and technology.

To do this, we must first determine the opportunity cost of producing each good in both countries. The opportunity cost of producing a good can be measured by the amount of the other good that must be given up to produce one more unit of the first good. If a country has a lower opportunity cost of producing a particular good, it has a comparative advantage in producing that good. Let A and B be two countries and X and Y be two goods. Suppose Country A's opportunity costs are: - To produce 1 unit of X, give up 2 units of Y - To produce 1 unit of Y, give up 0.5 units of X And Country B's opportunity costs are: - To produce 1 unit of X, give up 4 units of Y - To produce 1 unit of Y, give up 0.25 units of X In this case, Country A has a comparative advantage in producing good X (lower opportunity cost), and Country B has a comparative advantage in producing good Y.

According to the principle of comparative advantage, it is recommended for countries to specialize in producing the goods they have a comparative advantage in and then trade with each other. In our case, Country A would specialize in the production of good X, while Country B would specialize in the production of good Y.

When each country specializes in producing the goods they have a comparative advantage in, the overall efficiency of production across both countries increases. This can lead to an increase in the total production quantity of both goods. The production possibilities frontiers of both countries would shift outward, expanding the potential combinations of goods produced, enabling both countries to consume beyond their original PPFs through trade. This would result in both countries being better off as they can consume more of both goods compared to a scenario where both countries produced all goods domestically without specialization.