Question

The law of comparative advantage states that
a. nations should never import goods, but only export goods.
b. nations should only produce goods which they have available natural resources for.
c. a nation is better off when it produces goods and services that it has an absolute advantage in producing.
d. a nation is better off when it produces goods and services that it has a comparative advantage in producing.

Answer 1

Csonda has a comparative advantage in turnip production, once again, just as the law of comparative advantage suggests. Each nation has a good that it can produce at a lower opportunity cost than the other nation. The two nations can then trade these two goods for the betterment of both.