Consumers are no longer limited by their own country’s
production possibilities. Let us suppose that they prefer point
to point a. They have achieved a gain from trade by being
allowed to exchange some of their production of good Y for
some quantity of good X and thus to consume more of good X
than is produced at home.
Variable Production
In general, however, openness to trade with other countries will
change the pattern of domestic production, and this will create
further gains from trade. The country can now produce the
bundle of goods that is most valuable in world markets. That is
represented by the bundle d in the second figure. The
consumption possibilities boundary is shifted to the line by
changing production from a to d and thereby increasing the
country’s degree of specialization in good Y. For every point on
t't'