When one country can produce a given amount of a good using fewer inputs than any other country,

Question

Quizplus · Accepted Answer

The country with fewer inputs has an absolute advantage in producing the good since it can produce the same amount of the good with less resources. Comparative advantage, on the other hand, refers to a country's ability to produce a good at a lower opportunity cost than another country. The statement doesn't provide information on opportunity cost, hence we can't choose option B. Option C is also incorrect because specialization doesn't always lead to an increase in worldwide consumption possibilities. It depends on whether there are gains from trade and if trade barriers exist.

When One Country Can Produce a Given Amount of a Good