The concept of opportunity cost is crucial to the theory of comparative advantage.

Question

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The concept of opportunity cost is central to understanding the theory of comparative advantage. The theory states that countries should specialize in producing goods and services in which they have a lower opportunity cost compared to other countries, and this specialization leads to mutual gains from trade. Without the concept of opportunity cost, the theory of comparative advantage cannot be fully understood or applied.

The Concept of Opportunity Cost Is Crucial to the Theory