Under certain assumptions,the model of comparative advantage predicts that maximum output can be achieved if each person produces goods or services where
A) all factors of production are used in equal amounts.
B) the most equitable distribution is created.
C) the government intervenes the least.
D) firms maximize their revenues
E) he or she has the lowest opportunity cost.

Question

Quizplus · Accepted Answer

The theory of comparative advantage suggests that people should specialize in producing goods or services with the lowest opportunity cost, meaning the amount of other goods or services that must be given up in order to produce the chosen one. By doing so, each person can maximize their productivity and output, which ultimately leads to maximum overall output for the economy.

Under Certain Assumptions,the Model of Comparative Advantage Predicts That Maximum