If a country has the comparative advantage in producing cloth,in the market for cloth the autarky price would be _____ the world price and the country would _____ cloth.

Question

Quizplus · Accepted Answer

Under the principle of comparative advantage, a country should specialize in producing and exporting goods for which it has a lower opportunity cost relative to other countries. If a country has a comparative advantage in producing cloth, it means that it can produce cloth at a lower opportunity cost compared to other countries. Therefore, in the market for cloth, the autarky price (the price that the country would charge if it did not trade with other countries) would be lower than the world price (the price that prevails in the global market). Consequently, the country would export cloth to other countries in order to take advantage of the higher world price.

If a Country Has the Comparative Advantage in Producing Cloth,in