Comparative advantage is determined by the relative levels of autarky prices.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by comparing the opportunity costs of producing a certain good or service in two different countries. The opportunity cost is the trade-off between producing one good over another. Autarky prices refer to the prices of goods produced by a country when it is self-sufficient and not engaging in international trade. Therefore, by comparing the autarky prices of two countries, we can determine which country has a comparative advantage in producing a specific good or service.

Comparative Advantage Is Determined by the Relative Levels of Autarky