If a nation has an absolute advantage in producing a good,then it
A)will not have a comparative advantage in producing that good.
B)will always specialise in that good.
C)will have no need to trade with other nations.
D)might or might not have a comparative advantage in producing that good.
E)will have a comparative advantage in producing that good.

Question

Quizplus · Accepted Answer

Having an absolute advantage means the country can produce the good more efficiently than other countries. However, comparative advantage takes into account the opportunity cost of producing one good over another. It is possible that even though the country has an absolute advantage in producing a good, it may have a lower opportunity cost for producing another good, giving it a comparative advantage in that good. Therefore, having an absolute advantage does not guarantee a comparative advantage, and the country might or might not have a comparative advantage in producing that good.

If a Nation Has an Absolute Advantage in Producing a Good,then