Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that
A)Bulgaria also has an absolute advantage in producing sandals relative to Finland.
B)Bulgaria has a lower opportunity cost of producing sandals relative to Finland.
C)Finland has an absolute disadvantage in producing sandals relative to Bulgaria.
D)labour costs are higher for sandal producers in Finland than in Bulgaria.

Question

Quizplus · Accepted Answer

Comparative advantage means that a country can produce a good at a lower opportunity cost than another country. Therefore, Bulgaria has a lower opportunity cost of producing sandals relative to Finland, which is why Finland chooses to import sandals from Bulgaria. It does not necessarily mean that Bulgaria has an absolute advantage over Finland or that labor costs are higher in Finland.

Assume That Bulgaria Has a Comparative Advantage in Producing Sandals