Which of the following is correct about comparative advantage?
A) Some countries will have a comparative advantage in everything.
B) Having a comparative advantage without an absolute advantage is impossible.
C) A comparative advantage in a good means that the country can produce more of the good than any other country.
D) A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

Comparative advantage refers to a country's ability to produce a good at a lower opportunity cost than any other country. This means that for every other good that the country could produce, it would have to give up less in order to produce one unit of that good compared to any other country. It does not necessarily mean that the country produces more of the good than any other country, and it is possible for a country to have a comparative advantage in some goods but not all goods. Having an absolute advantage, where a country can produce a good more efficiently than any other country, is not necessary for having a comparative advantage. The statement in option A is incorrect as no country is likely to have an absolute advantage in everything.

Which of the Following Is Correct About Comparative Advantage