According to the principle of comparative advantage, worldwide output and consumption levels will be highest when goods are produced in nations where:

Question

Quizplus · Accepted Answer

The principle of comparative advantage states that countries will benefit from specializing in the production of goods and services in which they have the lowest opportunity costs. In other words, countries should produce the goods and services that they are relatively better at producing than other countries. This will lead to increased efficiency and higher global output and consumption levels. Therefore, the best choice is A, where domestic opportunity costs are lowest. Choices B, C, and D are not directly related to the principle of comparative advantage.

According to the Principle of Comparative Advantage, Worldwide Output and Consumption