The idea of comparative advantage is that:
A)each country can gain from trade as long as the opportunity cost of producing one good compared with another good is different between countries.
B)every country can gain from trade as long as all countries can produce roughly the same quantity of each good.
C)every country can gain from trade as long as the opportunity cost of producing one good compared with another good is the same as for other countries.
D)every country can gain from trade as long as the absolute amount of exports equals imports.

Question

Quizplus · Accepted Answer

Comparative advantage means that countries specialize in producing goods and services that they can produce at a lower opportunity cost than other countries. In other words, each country has a comparative advantage in producing a certain good or service over another country. This creates a basis for mutually beneficial trade, as each country can specialize in producing goods and services that they are relatively better at producing, and exchange them with other countries who have a comparative advantage in producing other goods and services. Therefore, choice A is the best answer. The idea of comparative advantage is that each country can gain from trade as long as the opportunity cost of producing one good compared with another good is different between countries, which means that each country should specialize in producing the good in which it has lower opportunity cost and trade with other countries to obtain the goods it has higher opportunity cost in producing.

The Idea of Comparative Advantage Is That