Increase production in economy with specialized resources

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1. If prices increase for an export good and provide an incentive to increase production in an economy with specialized resources, will the higher price always outweigh the increasing opportunity cost of pulling specialized factors away from producing other goods and services and result in complete specialization?

2. What would happen if the supply of monopoly money was suddenly increased, but V and T remained the same? How would it be different if T were to temporarily increase, but then revert back to its normal level within a few days?

3. What is comparative advantage in specialization in production and trade and what are the two ways to explain why it occurs?

Reference no: EM131094877

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