Which statement best describes the concept of the law of comparative advantage?

Question

Quizplus · Accepted Answer

The law of comparative advantage states that individuals and nations should specialize in producing the goods they can produce at a lower opportunity cost than others, and trade with others for goods they cannot produce as efficiently. This means that the individual with the lowest opportunity cost of producing a particular good should produce it, as they will be able to produce it more efficiently than others. Option B is incorrect because comparative advantage can exist even if one person does not have an absolute advantage in the production of both goods. Option C is incorrect because having a comparative advantage only means that an individual can produce a good at a lower opportunity cost than others, not necessarily that they have an absolute advantage in producing that good. Option D is incorrect because having an absolute advantage in producing a good does not necessarily mean that an individual has a comparative advantage in producing that good.

Which Statement Best Describes the Concept of the Law of Comparative