When a country loses its comparative advantage in the production of a good:
A)it should stop trading and become self-sufficient.
B)it will gain the comparative advantage in the production of another good.
C)it will become a loser in trade in the long run.
D)it will still have the absolute advantage in the production of the good.

Question

Quizplus · Accepted Answer

When a country loses its comparative advantage in the production of a good, it will tend to shift its production to another good in which it has a comparative advantage. This allows the country to continue trading and potentially gain a comparative advantage in a new good. Stopping trade and becoming self-sufficient would limit the country's economic growth and development. Additionally, a country may still have an absolute advantage in the production of a good but may not have a comparative advantage due to differences in opportunity costs between trading partners. Finally, becoming a "loser" in trade in the long run is not necessarily a given as countries can adapt and adjust their production and trading strategies over time.

When a Country Loses Its Comparative Advantage in the Production