-Refer to Exhibit 34-5.Country 1 has a comparative advantage in the production of __________,and country 2 has a comparative advantage in the production of __________.

Question

Quizplus · Accepted Answer

Comparative advantage is determined by which country can produce a good at a lower opportunity cost. If Country 1 can produce Good A with a lower opportunity cost than Country 2, and Country 2 can produce Good B with a lower opportunity cost than Country 1, then Country 1 has a comparative advantage in Good A, and Country 2 has a comparative advantage in Good B.