The table given below represents butter and ham production by two countries Norway and Sweden.Table 2.5

-A person has a comparative advantage in producing a good if:

Question

The table given below represents butter and ham production by two countries Norway and Sweden.Table 2.5
 
-A person has a comparative advantage in producing a good if:

Quizplus · Accepted Answer

Comparative advantage is based on opportunity cost, which means the cost of producing one good in terms of the production of another good that must be forgone. If a person can produce a good at a lower opportunity cost than anyone else, then that person has a comparative advantage in producing that good. Option A is incorrect as absolute cost is not relevant in determining comparative advantage. Option C and D are entirely unrelated to the concept of comparative advantage. Option E is also incorrect as producing a good at a higher opportunity cost than anyone else implies a comparative disadvantage.

The Table Given Below Represents Butter and Ham Production by Two