Suppose that the opportunity cost of producing goods differs between two nations.We can correctly state that
A)the two nations should not specialize in the production of goods.
B)each nation should produce all goods.
C)one country has a comparative advantage in the production of at least one of the goods.
D)neither country has a comparative advantage in the production of any good.

Question

Quizplus · Accepted Answer

The concept of opportunity cost indicates that one nation is relatively better at producing one good and the other nation is relatively better at producing another good. Therefore, it is beneficial for each nation to specialize in the production of the good for which it has a comparative advantage, and trade with the other nation. This will maximize the production and consumption of both goods, leading to greater overall efficiency and welfare.

Suppose That the Opportunity Cost of Producing Goods Differs Between