If there are two goods and two countries, then one country can have
A) a comparative advantage in only one good.
B) a comparative advantage in both goods.
C) a higher opportunity cost of producing both goods.
D) a lower opportunity cost of producing both goods.

Question

Quizplus · Accepted Answer

In a two-country, two-good model, it's impossible for one country to have a comparative advantage in both goods due to the principle of comparative advantage. This principle states that each country will specialize in producing the good for which it has a lower opportunity cost, meaning it can only have a comparative advantage in one of the two goods.

If There Are Two Goods and Two Countries, Then One