A nation has a comparative advantage in a good when it has a
A) lower absolute cost of producing the good.
B) higher opportunity cost of producing the good.
C) lower opportunity cost of producing the good.
D) higher absolute cost of producing the good.
E) tariff in place protecting the producers of the good.

Question

Quizplus · Accepted Answer

A nation has a comparative advantage in a good when it has a lower opportunity cost of producing the good. This means that the nation has to give up less of another good to produce one unit of the good in question. Lower opportunity cost means the nation is relatively more efficient in producing the good, which can lead to increased trade and benefits for both parties involved in the trade.

A Nation Has a Comparative Advantage in a Good When