Individuals A and B both produce good X. A has a comparative advantage in the production of good X if A
A) can produce more units of X in a given time period than can B.
B) has a lower opportunity cost of producing good X than has B.
C) can produce X using newer technology than can B.
D) has a lower opportunity cost of producing good X than of producing good Y.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by the opportunity cost of producing the good. If A has a lower opportunity cost of producing good X than B, then A has a comparative advantage in the production of good X. Choices A, C, and D do not necessarily determine comparative advantage.

Individuals a and B Both Produce Good X