How can a domestic producer determine whether or not it has a comparative advantage in the production of a good or service?
A) It cannot.
B) by comparing the price it receives to the prices of other domestic producers
C) by comparing the price it receives to the world price
D) by comparing the quantity it produces to the quantity produced in the world
E) by comparing the total domestic quantity to the total world quantity

Question

Quizplus · Accepted Answer

A domestic producer can determine whether or not it has a comparative advantage in the production of a good or service by comparing the price it receives to the world price. If the domestic price is lower than the world price, it has a comparative advantage and should focus on producing and exporting that good or service. If the domestic price is higher than the world price, it does not have a comparative advantage and should focus on producing other goods or services.

How Can a Domestic Producer Determine Whether or Not It