A country with a comparative advantage in producing one good may lose this advantage if too many resources are shifted to producing this good as a result,thereby,increasing production costs because some ill-suited resources are used to produce the good.

Question

Quizplus · Accepted Answer

This is a well-known concept in economics called the "law of diminishing returns." When too many resources are shifted to producing a single good, production costs can increase due to a variety of factors, such as the need to use less efficient resources or to invest in expensive capital equipment to continue expanding production. This can ultimately result in a loss of comparative advantage and reduced efficiency in the economy.

A Country with a Comparative Advantage in Producing One Good