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A-Level Economics · Comparative advantage and the gains from trade diagram question

Which point shows what the country CONSUMES once it trades?

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The diagram

The answer

Point C. C — 4 food and 5 services. It sits BEYOND the frontier: unattainable without trade. The country makes services at P, then exchanges some of them for food at the world rate, sliding down the terms-of-trade line to C. C lies outside its own PPF, so no amount of domestic reorganisation could ever reach it.

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This is one of 6 questions on the comparative advantage and the gains from trade diagram — every corner lettered, every wrong answer diagnosed.

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