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.

Question

Quizplus · Accepted Answer

According to the theory of comparative advantage, countries should specialize in the production of the goods they can produce at a lower opportunity cost than other countries, and trade with each other. This means that poor nations typically have a comparative advantage in goods that require more labor-intensive production, such as agricultural products, where they can compete with advanced industrialized nations. On the other hand, high-tech industries require significant investment in capital and education, which poor countries often lack. Therefore, poor nations typically have a comparative advantage in agricultural but not high-tech goods.

Which of the Following Statements Is True Concerning Comparative Advantage