According to Ricardo, a country will have a comparative advantage in the product in which its
A) labor productivity is relatively low.
B) labor productivity is relatively high.
C) labor mobility is relatively low.
D) labor mobility is relatively high.

Question

Quizplus · Accepted Answer

Ricardo's theory of comparative advantage states that a country should specialize in producing and exporting the goods in which it has a lower opportunity cost, meaning the loss of production of one good when producing another. Labor productivity is a significant determinant of a country's opportunity cost. Therefore, a country will have a comparative advantage in the product in which its labor productivity is relatively high.

According to Ricardo, a Country Will Have a Comparative Advantage