Individuals A and B can both produce good X.We say that A has a comparative advantage in the production of good X if
A)A has a lower opportunity cost of producing X than B.
B)A has a higher opportunity cost of producing X than B.
C)A can produce more units of X in a given time period than B.
D)A can produce X using newer technology than B.
E)A can produce less units of X in a given time period than B.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by the opportunity cost of producing a good. If A has a lower opportunity cost than B, that means A has to give up less of other goods to produce one unit of X compared to B. Therefore, A has a comparative advantage in producing good X.

Individuals a and B Can Both Produce Good X