Suppose that only two goods are produced in an economy.If a country possesses the comparative advantage in the production of one good then it:
A) must also possess the comparative advantage in the production of the other good.
B) must also possess the absolute advantage in the production of that good.
C) cannot also possess the comparative advantage in the production of the other good.
D) cannot also possess the absolute advantage in the production of that good.

Question

Quizplus · Accepted Answer

Just because a country has a comparative advantage in one good does not mean that it must have a comparative advantage in another good. Comparative advantage is determined by the opportunity cost of producing one good versus another, and this can vary depending on the country's resources and technology.

Suppose That Only Two Goods Are Produced in an Economy