A country is deemed to have a comparative advantage in a product if:
A)the world price is lower than its domestic price
B)the world price is higher than its domestic price
C)the world price is equal to its domestic price
D)none of the above

Question

Quizplus · Accepted Answer

According to the concept of comparative advantage, a country has a comparative advantage in producing a particular product when it can produce that product at a lower opportunity cost than other countries. This means that the country can produce the product at a lower domestic price compared to the world price, which is higher. Therefore, the correct answer is B - the world price is higher than its domestic price.

A Country Is Deemed to Have a Comparative Advantage in a Product