Trading expands consumption possibilities beyond the PPC

Steps:

• Point R lies outside the PPC MN, meaning it's unattainable through domestic production alone.
• The country has a comparative advantage in Y, so it should specialize in producing Y.
• By exporting surplus Y and importing X via international trade, it achieves the X-Y combination at R.
• This leverages gains from trade, allowing consumption beyond production constraints.

Why D is correct:

• International trade enables consumption outside the PPC by allowing specialization and exchange based on comparative advantage (Ricardo's law).

Why the others are wrong:

• A: Reducing unemployment improves efficiency but keeps output on or inside the PPC.
• B: Specializing in X ignores the comparative advantage in Y, leading to inefficient production inside the PPC.
• C: Specializing in Y shifts production along the PPC toward more Y and less X, not reaching R.

Final answer: D