Question

Is it possible for a country to have a comparative advantage in producing a good without also having an absolute advantage? A country without an absolute advantage in producing a good…
1. will have a comparative advantage if it is able to produce that good at a low total cost.
2. will have a comparative advantage if it produces more efficiently.
3. will have a comparative advantage if it devotes more resources toward that good’s production.
4. will have a comparative advantage if it has a lower opportunity cost of producing that good.
5. will not have a comparative advantage because it has fewer resources.

Answer 1

Answer:

4) will have a comparative advantage if it has a lower opportunity cost of producing that good.

Explanation:

For example, country A can produce 50 units of X and 40 units of Y, while country B can produce 30 units of X and 15 units of Y.

• Country A's opportunity cost of producing one unit of  X = 40/50 = 0.8 units of Y
• Country A's opportunity cost of producing one unit of  Y = 50/40 = 1.2 units of X

• Country B's opportunity cost of producing one unit of  X = 15/30 = 0.5 units of Y
• Country B's opportunity cost of producing one unit of  Y = 30/15 = 2 units of X

Country A has a comparative advantage in the production of good Y, while country B has a comparative advantage in the production of good X. Country A has an absolute advantage in the production of both goods.