A producer is said to have a comparative advantage in the production of a good when the producer ________ compared to other producers.

Question

Quizplus · Accepted Answer

Comparative advantage is when a producer can produce a good at a lower opportunity cost compared to other producers. Opportunity cost refers to the cost of giving up the production of one good to produce another good. Therefore, if a producer has a lower opportunity cost for producing a good, it can produce that good more efficiently than other producers, giving it a comparative advantage. None of the other options listed pertain to comparative advantage.

A Producer Is Said to Have a Comparative Advantage in the Production