When determining what a country should specialize in producing, economists chiefly consider:
A) absolute advantage.
B) comparative advantage.
C) incentives.
D) the dispersion of knowledge.

Question

Quizplus · Accepted Answer

Economists chiefly consider comparative advantage when determining a country's specialization in producing. This concept suggests that a country should produce and export goods and services in which it has a lower opportunity cost and import goods and services in which it has a higher opportunity cost. This leads to increased efficiency and lower prices for consumers. Absolute advantage, incentives, and the dispersion of knowledge are also important factors, but comparative advantage is the key concept in determining specialization.

When Determining What a Country Should Specialize in Producing, Economists