Which of the following statements is true concerning comparative advantage?
A)Poor nations typically have a comparative advantage in high-tech but not agricultural goods.
B)Poor nations typically have a comparative advantage in agricultural but not high-tech goods.
C)Poor nations typically have a comparative advantage in the production of all goods.
D)Rich nations typically have a comparative advantage in the production of all goods.

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, countries specialize in producing goods in which they have a lower opportunity cost. Poor nations typically have a lower opportunity cost in agricultural goods due to their abundant labor force and favorable climate, while they may have a higher opportunity cost in high-tech goods due to their lack of advanced technology and skilled workers. Therefore, poor nations typically have a comparative advantage in agricultural goods, but not necessarily in high-tech goods.

Which of the Following Statements Is True Concerning Comparative Advantage