Question

A country has a comparative advantage in trade when it:

A. can produce a good more efficiently than another country.

B. has a lower opportunity cost producing a good than another
country

C. is the only country that produces a particular good.

D. produces all the essential goods its citizens require.

Answer 1

Answer:

Comparative advantage refers to the ability to produce goods and services at a lower opportunity cost, not necessarily at a greater volume or quality. Comparative advantage is a key insight that trade will still occur even if one country has an absolute advantage in all products.

Explanation:

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Answer 2

Answer:

When a country can produce at a lower opportunity cost than its trading partners, it has a comparative advantage. While a country cannot have a comparative advantage in all commodities and services, it can produce all goods with an absolute advantage.

Explanation:

What does low opportunity cost means?

A country has a comparative advantage in economic terms when it can produce at a lower opportunity cost than its trading counterparts. While a country cannot have a comparative advantage in all commodities and services, it can produce all goods with an absolute advantage.

Comparative Advantage-

• The ability to create goods and services at a lower opportunity cost, not necessarily at a higher volume or quality, is referred to as comparative advantage.
• The concept of comparative advantage states that commerce will take place even if one country has an absolute edge in all products.

How does opportunity cost differ from country?

The fact that the two countries' opportunity costs differ shows the prospect of mutually beneficial commerce. Trade possibilities will lead to a higher level of specialization in both countries, specialization that reflects comparative advantage.

Learn more about Opportunity Cost here-

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