Mike and Mary each produce two goods.According to the principle of comparative advantage,the total output produced by the individuals will be greatest
A)if Mary produces both goods and Mike produces nothing.
B)if each good is produced by the individual who has the lower opportunity cost of producing the good.
C)if each good is produced by the individual who has the higher absolute cost of producing the good.
D)if Mike produces both goods and Mary produces nothing.

Question

Quizplus · Accepted Answer

The principle of comparative advantage states that individuals should specialize in producing the good in which they have a lower opportunity cost. Therefore, if each individual produces the good in which they have a lower opportunity cost, the total output will be greater than if one person produces everything or if each person produces the good in which they have a higher absolute cost.

Mike and Mary Each Produce Two Goods