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

Question

Quizplus · Accepted Answer

Comparative advantage refers to a country's ability to produce a certain product or service more efficiently than other countries, with a lower opportunity cost. The opportunity cost is the cost of producing one good or service in terms of the production of another (i.e., what must be given up to produce the first good). Thus, a country has a comparative advantage in the production of a good if it can produce the good at a lower opportunity cost than any other country. Option A is incorrect because a country can have a comparative advantage in a good even if it does not produce the most of that good. Option C is incorrect because no country can have a comparative advantage in everything, as every country has different factors of production, resources, and skills. Option D is incorrect because a country can have a comparative advantage without an absolute advantage, which refers to being the most efficient producer of a good or service.

Which of the Following Is Correct About Comparative Advantage