Through specialisation and international trade, a nation can achieve which position relative to its own production possibilities curve (PPC)?

Introduction / Context:
The production possibilities curve, or PPC, shows the maximum combinations of two goods that an economy can produce with its current resources and technology when fully employed. Points inside the curve are inefficient, points on the curve are efficient, and points outside the curve are unattainable without changes in resources or technology. International trade and specialisation play an important role in allowing countries to consume beyond what they can produce on their own. This question explores how specialisation according to comparative advantage and subsequent trade can affect a nation's attainable consumption possibilities relative to its production possibilities curve.

Given Data / Assumptions:

• Each nation faces a production possibilities curve based on its current resources and technology.
• Specialisation occurs when a country focuses production on goods for which it has comparative advantage.
• International trade allows countries to exchange surplus output for goods they do not produce domestically.
• We assume trade is beneficial and not blocked by extreme protectionist measures.

Concept / Approach:
The key idea is comparative advantage. Even if one country is absolutely more efficient in producing all goods, it gains from specialising in goods it can produce at relatively lower opportunity cost and trading with others. By specialising, a country can produce more of certain goods than it would under self sufficiency. Through trade, it can exchange part of this surplus for other goods and thereby consume a combination that would be impossible using only its own production possibilities. Graphically, the consumption point can lie outside the original PPC, even though the production point remains on or inside the curve. Thus, specialisation and trade expand consumption possibilities without an immediate shift in the production possibilities curve itself.

Step-by-Step Solution:
Step 1: Recall that the PPC represents combinations of goods a country can produce with given resources and technology. Step 2: Understand that points outside the PPC are initially unattainable through production alone. Step 3: Consider what happens when a country specialises in producing goods where it has a comparative advantage. Step 4: After specialising, the country produces more of certain goods and can export some of this surplus. Step 5: By trading exports for imports, the country obtains additional goods that it did not produce itself. Step 6: The resulting combination of consumed goods can lie outside the original PPC, reflecting higher consumption possibilities.

Verification / Alternative check:
To verify, imagine a two good world with food and clothing. A country can produce any combination on its PPC, but if it tries to produce both goods itself, it must sacrifice some food to produce more clothing and vice versa. If the country specialises in food where it has comparative advantage, it can produce more food than before and trade part of this food for clothing from another country. Its final consumption of food and clothing can now exceed what was possible within the original PPC. Graphically, this looks like moving from a point on the PPC to a point outside it. This confirms that specialisation and trade expand consumption possibilities beyond the domestic production frontier.

Why Other Options Are Wrong:
The option claiming that a nation will always consume inside its PPC describes inefficiency, not the effect of trade. The option saying the PPC shifts to the left represents a loss of resources or technology and is unrelated to the benefits of trade. The option suggesting a rightward shift in the PPC without changes in technology confuses production capacity with consumption possibilities; trade can extend consumption opportunities without changing the production frontier itself. The option stating that a country must consume only at the midpoint of the PPC is arbitrary and false. Only the option that describes consumption at a combination of goods outside the PPC reflects the true effect of specialisation and mutually beneficial trade.

Common Pitfalls:
Students sometimes confuse the PPC, which shows production possibilities, with the consumption possibilities frontier under trade. They may think that trade shifts the PPC itself, when in fact trade primarily affects the set of attainable consumption points given a particular production point. Another common error is to assume that trade benefits only large or rich countries, ignoring the role of comparative advantage. To avoid these mistakes, remember that production possibilities and consumption possibilities are related but distinct, and trade allows consumption beyond what is produced domestically at a given time.

Final Answer:
Thus, through specialisation and international trade, a nation can attain a combination of goods lying outside its current production possibilities curve, even though its production frontier itself has not yet shifted.