According to the principle of comparative advantage, a nation should specialize in economic activities
A) that incur lower opportunity costs.
B) that incur higher opportunity costs.
C) for which it has an absolute advantage.
D) for which it has no absolute advantage.

Question

Quizplus · Accepted Answer

The principle of comparative advantage states that a nation should specialize in the production of goods or services in which it has a lower opportunity cost compared to other nations. This means that a nation should produce goods or services where it has a comparative advantage, even if it has no absolute advantage in producing them. Therefore, the correct answer is A, which states that a nation should specialize in economic activities that incur lower opportunity costs.

According to the Principle of Comparative Advantage, a Nation Should