When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region, it is practicing

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The scenario described is an example of comparative advantage, which occurs when a country or region specializes in producing the good with the lower opportunity cost compared to another country or region. This means that the country or region can produce the good at a lower cost (in terms of foregone alternative production) than its trading partner, and thus has a comparative advantage in producing that particular good.

When a Country or a Region of a Country Specializes