Which of the following best describes comparative advantage?
A) being able to produce more output than any other country
B) using the fewest number of resources to produce a given amount of output
C) having the largest number of resources compared to other countries
D) forgoing the fewest units of one product to produce a unit of another product
E) It is the same as absolute advantage.

Question

Quizplus · Accepted Answer

Comparative advantage refers to the ability of a country or individual to produce a particular good at a lower opportunity cost than another country or individual. This means that they must forgo the fewest units of one product to produce a unit of another product. Therefore, option D is the best choice. Option A is incorrect because producing more output does not necessarily mean having a comparative advantage. Option B is incorrect because using fewer resources does not necessarily mean having a comparative advantage. Option C is incorrect because having more resources does not necessarily mean having a comparative advantage. Option E is incorrect because comparative advantage is not the same as absolute advantage.

Which of the Following Best Describes Comparative Advantage