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A society does not need to produce every good it consumes because of:
AComparative advantage
BDiminishing returns
CMarginal utility gain
DSunk cost effects
Answer & Solution
Correct answer: A. Comparative advantage
1. Trade lets a society consume beyond what it could make alone.
2. While every society must choose how much of each good or service it should produce, it does not need to produce every single good it consumes.
3. The production possibilities frontier is used to explain comparative advantage.
4. Specialising where the opportunity cost is lowest and trading is what makes this possible.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 2 'Choice in a World of Scarcity', sections 2.1-2.3_
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