If country X has a higher labor productivity than the rest of the world in the production of a good, then country X has a comparative advantage in the production of the good.

Question

Quizplus · Accepted Answer

Comparative advantage is determined not by absolute productivity but by the opportunity cost of producing a good relative to other goods. A country can have higher labor productivity in a good but still lack a comparative advantage if it has an even higher productivity in producing another good.

If Country X Has a Higher Labor Productivity Than the Rest