If Nation A can produce shirts at a lower opportunity cost than any other nation, Nation A is said to have a(n) _______ in the production of shirts.

Question

Quizplus · Accepted Answer

When a nation has a lower opportunity cost of producing a good than any other nation, they are said to have a comparative advantage in production of that good. This means that they can produce the good at a lower cost (in terms of other goods they have to give up producing) than anyone else and thus have an incentive to specialize in that good and trade with other nations.

If Nation a Can Produce Shirts at a Lower Opportunity