Comparative advantage suggests that states
A) produce only goods that can be produced most cost efficiently and trade for the rest.
B) compare and adjust their economic development strategies in order to gain advantage.
C) produce only goods with high value added comparative advantage.
D) produce pizza instead of beer.

Question

Quizplus · Accepted Answer

Comparative advantage suggests that states produce only goods that can be produced most cost efficiently and trade for the rest. This allows for specialization in production, increased efficiency, and mutually beneficial trade relationships with other states. Producing only goods with high value added comparative advantage, as in option C, may limit the range of goods and services a state produces and could lead to less efficient production processes. Option B is incorrect as comparative advantage is not about adjusting economic development strategies but rather about focusing on areas of production where a state has a competitive advantage. Option D is incorrect as it does not relate to the concept of comparative advantage.

Comparative Advantage Suggests That States